Strategic Accounting Disclosure

This monograph surveys the analytic accounting disclosure literature in which firms strategically communicate information to investors. Its purpose is to identify guidelines that firm management might consider when voluntarily disclosing or mandatorily reporting information to investors and also factors that investors might recognize when using a firm's disclosure. It discusses persuasion games, costless signaling games, and costly signaling games. The monograph highlights the primary features of the equilibria in these games and how communication varies in each of these settings. It then surveys work that uses these frameworks. This work suggests that a firm's disclosure policy depends on the features of its environment. The monograph concludes that characterizing firm disclosure policies for a set of generic features of the reporting environment awaits further research.