Abstract
A firm's incentive to disclose has been linked empirically to a range of variables, including information asymmetry, agency costs, political costs, and proprietary costs. While the intuition underlying each of the variables seems plausible, Verrecchia (2001) argues that disclosure models can be characterized as an eclectic mingling of highly idiosyncratic economic-based models, and challenges researchers to take the first steps to unification. First, we investigate the role of ownership and competition variables in explaining voluntary segment disclosures in Australian firms and find support for both these variables. Second, drawing on theory supported by the corporate governance, strategic management and industrial organization literatures, we introduce a new economic variable that unifies both ownership and competition variables. We find that the unifying variable performs better than our model focusing on ownership and competition variables alone. We conduct a series of robustness tests on the model and find that its significance is not affected by the inclusion of disclosure control variables identified in prior literature, the change in standard, and acquisitions and disposals of physical assets.
| Original language | English |
|---|---|
| Pages (from-to) | 235-263 |
| Number of pages | 29 |
| Journal | Australian Journal of Management |
| Volume | 31 |
| Issue number | 2 |
| DOIs | |
| Publication status | Published - 1 Jan 2006 |
| Externally published | Yes |
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Ownership, Competition, and Financial Disclosure. / Birt, Jacqueline L.; Bilson, Chris M.; Smith, Tom; Whaley, Robert E.
In: Australian Journal of Management, Vol. 31, No. 2, 01.01.2006, p. 235-263.Research output: Contribution to journal › Article › Research › peer-review
TY - JOUR
T1 - Ownership, Competition, and Financial Disclosure
AU - Birt, Jacqueline L.
AU - Bilson, Chris M.
AU - Smith, Tom
AU - Whaley, Robert E.
PY - 2006/1/1
Y1 - 2006/1/1
N2 - A firm's incentive to disclose has been linked empirically to a range of variables, including information asymmetry, agency costs, political costs, and proprietary costs. While the intuition underlying each of the variables seems plausible, Verrecchia (2001) argues that disclosure models can be characterized as an eclectic mingling of highly idiosyncratic economic-based models, and challenges researchers to take the first steps to unification. First, we investigate the role of ownership and competition variables in explaining voluntary segment disclosures in Australian firms and find support for both these variables. Second, drawing on theory supported by the corporate governance, strategic management and industrial organization literatures, we introduce a new economic variable that unifies both ownership and competition variables. We find that the unifying variable performs better than our model focusing on ownership and competition variables alone. We conduct a series of robustness tests on the model and find that its significance is not affected by the inclusion of disclosure control variables identified in prior literature, the change in standard, and acquisitions and disposals of physical assets.
AB - A firm's incentive to disclose has been linked empirically to a range of variables, including information asymmetry, agency costs, political costs, and proprietary costs. While the intuition underlying each of the variables seems plausible, Verrecchia (2001) argues that disclosure models can be characterized as an eclectic mingling of highly idiosyncratic economic-based models, and challenges researchers to take the first steps to unification. First, we investigate the role of ownership and competition variables in explaining voluntary segment disclosures in Australian firms and find support for both these variables. Second, drawing on theory supported by the corporate governance, strategic management and industrial organization literatures, we introduce a new economic variable that unifies both ownership and competition variables. We find that the unifying variable performs better than our model focusing on ownership and competition variables alone. We conduct a series of robustness tests on the model and find that its significance is not affected by the inclusion of disclosure control variables identified in prior literature, the change in standard, and acquisitions and disposals of physical assets.
UR - http://www.scopus.com/inward/record.url?scp=84992861755&partnerID=8YFLogxK
U2 - 10.1177/031289620603100204
DO - 10.1177/031289620603100204
M3 - Article
VL - 31
SP - 235
EP - 263
JO - Australian Journal of Management
JF - Australian Journal of Management
SN - 0312-8962
IS - 2
ER -