The Expected Costs of Increased Disclosure. Firm- and Industry-specific Forces

Contents

Contents

List of Abbreviations

1. Introduction

2. The Capital Market Effects of Increased Disclosure
2.1. Ambiguous Predictions about the Capital Market Effects: Information Asymmetry as Link between Public Disclosure and Capital Market Outcomes
2.1.1. The Effect of Increased Disclosure on Information Asymmetry: A Complementary versus Substitutive Relationship between Private and Public Information
2.1.2. The Effect of Information Asymmetry on Capital Market Outcomes
2.2. Empirical Evidence on the Capital Market Effects
2.2.1. Reduction of Information Asymmetry through Increased Disclosure
2.2.2. Capital Market Benefits through Voluntary Disclosure
2.2.3. Conflicting Evidence and Reservations about Empirical Studies Implying Capital Market Benefits

3. The Ambiguity of Expected Cost of Disclosure
3.1. Litigation Costs: Dependence on Disclosure Horizon and Tone
3.1.1. Theoretical Predictions: Preemption Effect versus Chilling Effect
3.1.2. Preemption Effect: Reduction of Litigation Costs through Increased Disclosure
3.1.3. Chilling Effect: Rise of Litigation Costs through Increased Disclosure
3.2. Proprietary Costs: Dependence on the Nature of Competition
3.2.1. Limitations of Studies Utilizing Industry Concentration-based Measures
3.2.2. Linking the Nature of Competition to Proprietary Costs
3.2.2.1. Competition from Market Incumbents versus Competition from New Entrants
3.2.2.2. Difficulties Identifying the Nature of Competition
3.2.2.3. Establishing a Link between the Nature of Competition and Proprietary Costs
3.2.3. Additional Forces Impeding a Distinct Link between Disclosure and Proprietary Costs

4. Conclusion

References

Statutory Declaration (in German Language)