|
The Differential Effects of Proprietary Cost on the Quantity versus Quality of Voluntary Corporate Disclosure
May H Zhang,
University of Missouri - Columbia
ABSTRACT. Analytic research examines quantity and quality of public information and show that they each affect cost of capital independently. However, there is no empirical evidence on the difference between the two. I decompose disclosure decision into quantity and quality decisions and examine their relations with proprietary cost. I find strong contrasting effects of proprietary cost on the quantity vs. quality of voluntary disclosures. Firms with high proprietary cost make more frequent but less precise and less accurate disclosure, suggesting that these firms lower disclosure quality to reduce information usefulness to competitors. 3SLS regressions reveal a substitute relation between disclosure quantity and quality for high proprietary cost firms. This study highlights the importance of the distinction between quantity and quality of information in disclosure research. Future research may examine the differential consequences of quantity and quality of voluntary disclosures.
Full-Text is no longer available online. Please contact the author(s) for more information about this manuscript.
Back to Session Listing
|