Jurnal Umum
Disclosure “Bunching"
This paper studies managers’ preferences among information acquisition
and disclosure policies when their firms are required to engage in “real-time”
or “continuous” financial reporting. The paper predicts that for many, but
not all, processes describing the distribution of their firms’ cash flows, when
subject to such reporting requirements, managers will engage in disclosure
“bunching,” that is, they will bunch the discretionary component of the information
they acquire and disclose into a single point in time rather than
spread the acquisition and disclosure of that information over time. We show
that managers’ preferred bunching period depends on managers’ strategy
for trading in their firms’ shares, managers’ risk aversion, the risk premium
the capital market attaches to firms’ shares, and the size of managers’ initial
ownership stakes in their firms. We also study and characterize how the
equilibrium prices of firms’ shares vary over time and also how managers’
optimal trading strategies vary with their most preferred “bunching” strategies.
Several extensions confirm the robustness of the optimality of disclosure
“bunching.”
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