Take Action

Home | Faculty & Research Overview | Research

Research Details

Voting over Disclosure Standards, European Accounting Review

Abstract

This article examines the nature of disclosure standards, under the assumption that (i) standards preferred by more firms are collectively chosen and (ii) privately informed firms prefer standards that increase market perceptions about the value of their assets. A standard is stable if it is preferred by a large enough super-majority of firms over any other standards. Absent any restriction on possible standards, only unanimity would make a standard stable. By contrast, when requiring standards that classify news from best to worst, there is at most a single stable standard, and it must be full disclosure. For a large class of distributions over valuations, the required super-majority is about two-thirds, close to the majority required in many standard-setting boards. Value distributions with heavy tails, such as news that contains extreme risks, require higher super-majorities to be stable. These insights are robust to settings in which the information is used in decision-making.

Type

Article

Author(s)

Jeremy Bertomeu, Robert Magee, Georg Schneider

Date Published

2018

Citations

Bertomeu, Jeremy, Robert Magee, and Georg Schneider. 2018. Voting over Disclosure Standards. European Accounting Review.

KELLOGG INSIGHT

Explore leading research and ideas

Find articles, podcast episodes, and videos that spark ideas in lifelong learners, and inspire those looking to advance in their careers.
learn more

COURSE CATALOG

Review Courses & Schedules

Access information about specific courses and their schedules by viewing the interactive course scheduler tool.
LEARN MORE

DEGREE PROGRAMS

Discover the path to your goals

Whether you choose our Full-Time, Part-Time or Executive MBA program, you’ll enjoy the same unparalleled education, exceptional faculty and distinctive culture.
learn more

Take Action