Artikel

Endogenous governance transparency and product market competition

This paper analyzes the determinants of governance transparency. In our model, entrepreneurs optimally decide the precision of their earning reporting by trading off the possibility of expropriating profits against the capacity to attract external funding.We find that information is only valuable if enough quality of it is disclosed. Otherwise, the entrepreneur will always pretend to be unsuccessful and the capital market will break down. If, by contrast, a minimum precision level is ensured, fund diversion will be zero but full disclosure is still not achieved.We showthat an important driving force behind governance transparency is product market competition. Tougher competition leads to more firms competing for funding, which in turn changes how resources are allocated since each individual firm becomes less important in the portfolio choice. Firms react to this loss of market power by increasing transparency. Furthermore, firms characterized by low corporate profits or firms in a country with a strong legal system will be more likely to avoid voluntary disclosure regimes.

Sprache
Englisch

Erschienen in
Journal: SERIEs - Journal of the Spanish Economic Association ; ISSN: 1869-4195 ; Volume: 4 ; Year: 2013 ; Issue: 1 ; Pages: 113-136 ; Heidelberg: Springer

Klassifikation
Wirtschaft
Asymmetric and Private Information; Mechanism Design
Portfolio Choice; Investment Decisions
Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
Thema
corporate governance
voluntary disclosure
portfolio choice
incentives
product market competition

Ereignis
Geistige Schöpfung
(wer)
Hidalgo-Cabrillana, Ana
Ereignis
Veröffentlichung
(wer)
Springer
(wo)
Heidelberg
(wann)
2013

DOI
doi:10.1007/s13209-011-0082-3
Handle
Letzte Aktualisierung
10.03.2025, 11:42 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Artikel

Beteiligte

  • Hidalgo-Cabrillana, Ana
  • Springer

Entstanden

  • 2013

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