The Economics of Firms' Public Disclosure: Theory and Evidence

62 Pages Posted: 18 Sep 2017 Last revised: 7 Feb 2020

See all articles by Matthias Breuer

Matthias Breuer

Columbia University

Katharina Hombach

Carl von Ossietzky University of Oldenburg

Maximilian A. Müller

ESMT Berlin

Date Written: February 1, 2020

Abstract

Using a price-theoretic framework, we derive and empirically test a fundamental demand force shaping firms’ public disclosure decisions. Our framework suggests that the number of firms’ transacting stakeholders, not just their shareholders, is a major determinant of disclosure demand and, hence, firms’ decision to disclose publicly. Exploiting comprehensive data on stakeholders’ revealed preferences for private firms’ public disclosure, our empirical analysis supports the predicted importance of the number of transacting stakeholders for firms’ public disclosure across several settings and disclosure margins. Our framework is particularly suited for guiding the growing literature investigating non-standard public disclosure settings such as private firms and the influence of stakeholders other than shareholders.

Keywords: financial statements, public disclosure, disclosure demand, private firms, stakeholders

JEL Classification: M41

Suggested Citation

Breuer, Matthias and Hombach, Katharina and Müller, Maximilian A., The Economics of Firms' Public Disclosure: Theory and Evidence (February 1, 2020). Available at SSRN: https://ssrn.com/abstract=3037002 or http://dx.doi.org/10.2139/ssrn.3037002

Matthias Breuer (Contact Author)

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States

Katharina Hombach

Carl von Ossietzky University of Oldenburg ( email )

Ammerländer Heerstraße 114-118
Oldenburg, 26129
Germany

Maximilian A. Müller

ESMT Berlin ( email )

Schlossplatz 1
Berlin, 10178
Germany

HOME PAGE: http://faculty-research.esmt.berlin/person/maximilian-muller/bio

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