Information Asymmetry, Corporate Disclosure, and the Capital Markets: a Review of the Empirical Disclosure Literature
Journal of Accounting and Economics 31 (2001) 405–440
Information asymmetry, corporate disclosure, and the capital markets: A review of the empirical disclosure literature$
Paul M. Healy*, Krishna G. Palepu
Graduate School of Business, Harvard University, Boston, MA 02446, USA Received 14 January 2000; received in revised form 16 March 2001
Abstract Financial reporting and disclosure are potentially important means for management to communicate firm performance and governance to outside investors. We provide a framework for analyzing managers’ reporting and disclosure decisions in a capital markets setting, and identify key research questions. We then review current empirical research on disclosure regulation, information intermediaries, and the determinants and economic consequences of corporate disclosure. Our survey concludes that current research has generated a number of useful insights. We identify many fundamental questions that remain unanswered, and changes in the economic environment that raise new questions for research. r 2001 Published by Elsevier Science B.V.
JEL classification: D82; G30; G33; G41; M41 Keywords: Reporting decisions; Voluntary disclosure
$ This paper has benefited from comments from S.P. Kothari and Ross Watts (the editors), as well as participants at the 2000 JAE Conference. We are also grateful to Tatiana Sandino for research assistance, and the Division of Research at the Harvard Business School for financial support.
*Corresponding author. Tel.: +1-617-495-1283; fax: +1-617-496-7387. E-mail address: phealy@hbs.edu (P.M. Healy). 0165-4101/01/$ - see front matter r 2001 Published by Elsevier Science B.V. PII: S 0 1 6 5 - 4 1 0 1 ( 0 1 ) 0 0 0 1 8 - 0
406
P.M. Healy, K.G. Palepu / Journal of Accounting and Economics 31 (2001) 405–440
1. Introduction Corporate disclosure is critical for the functioning of an efficient capital market.1 Firms provide disclosure through regulated financial reports, including the financial
Information asymmetry, corporate disclosure, and the capital markets: A review of the empirical disclosure literature$
Paul M. Healy*, Krishna G. Palepu
Graduate School of Business, Harvard University, Boston, MA 02446, USA Received 14 January 2000; received in revised form 16 March 2001
Abstract Financial reporting and disclosure are potentially important means for management to communicate firm performance and governance to outside investors. We provide a framework for analyzing managers’ reporting and disclosure decisions in a capital markets setting, and identify key research questions. We then review current empirical research on disclosure regulation, information intermediaries, and the determinants and economic consequences of corporate disclosure. Our survey concludes that current research has generated a number of useful insights. We identify many fundamental questions that remain unanswered, and changes in the economic environment that raise new questions for research. r 2001 Published by Elsevier Science B.V.
JEL classification: D82; G30; G33; G41; M41 Keywords: Reporting decisions; Voluntary disclosure
$ This paper has benefited from comments from S.P. Kothari and Ross Watts (the editors), as well as participants at the 2000 JAE Conference. We are also grateful to Tatiana Sandino for research assistance, and the Division of Research at the Harvard Business School for financial support.
*Corresponding author. Tel.: +1-617-495-1283; fax: +1-617-496-7387. E-mail address: phealy@hbs.edu (P.M. Healy). 0165-4101/01/$ - see front matter r 2001 Published by Elsevier Science B.V. PII: S 0 1 6 5 - 4 1 0 1 ( 0 1 ) 0 0 0 1 8 - 0
406
P.M. Healy, K.G. Palepu / Journal of Accounting and Economics 31 (2001) 405–440
1. Introduction Corporate disclosure is critical for the functioning of an efficient capital market.1 Firms provide disclosure through regulated financial reports, including the financial
References: P.M. Healy, K.G. Palepu / Journal of Accounting and Economics 31 (2001) 405–440 435 P.M. Healy, K.G. Palepu / Journal of Accounting and Economics 31 (2001) 405–440 437 P.M. Healy, K.G. Palepu / Journal of Accounting and Economics 31 (2001) 405–440 439