Stephen Penman

Disclosure Rules, Information-Production and Capital Market Equilibrium: The Case of Forecast Disclosure Rules

Coauthor(s): Nicholas Dopuch, Nicholas Gonedes.

Abstract:

This paper deals primarily with forecast disclosure rules, a topic that has attracted the attention of both the Securities and Exchange Commission and the accounting profession. We consider two fundamental and related aspects of such a rule: 1) the extent to which the type of information to be disclosed conveys information pertinent to valuing firms; and 2) the extent to which a rule requiring public forecast disclosure is consistent with Pareto optimal allocations of resources. We deal with the first by presenting empirical evidence on the information content of income forecasts, and the second by discussing various theoretical issues that seem to have been ignored in debates on forecast (and other) disclosure rules. Finally, our analysis deals only with external accounting and, in particular, with accounting numbers transmitted to capital market agents.

Source: Journal of Accounting Research
Exact Citation:
Dopuch, Nicholas, Nicholas Gonedes, and Stephen Penman. "Disclosure Rules, Information-Production and Capital Market Equilibrium: The Case of Forecast Disclosure Rules." Journal of Accounting Research 14, no. 1 (Spring 1976): 89-137.
Volume: 14
Number: 1
Pages: 89-137
Date: Spring 1976