The enforcement of mandatory disclosure rules
Abstract
This paper examines the incentives of a firm to invest in information about the quality of its product and to disclose its findings. If the firm conceals information, it might be detected and fined. We show that optimal monitoring is determined by a trade-off. Overall, stricter enforcement reduces the incentives for selective reporting but crowds out information search. Our model implies that there are situations in which the relationship...
Paper Details
Title
The enforcement of mandatory disclosure rules
Published Date
Nov 1, 2018
Journal
Volume
167
Pages
21 - 32
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