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n and dissemination of accounting reports, are conceptually straightforward. However, as illustrated by the recent debate about the economic consequences of SOX (e.g., Wall Street Journal, 2/10/2004; Ribstein, 2005), these direct costs can be substantial, especially considering the opportunity costs of those involved in the disclosure process. Moreover, fixed disclosure costs lead to economies of scale and can make certain disclosures particularly burdensome for smaller firms. Disclosures can also have indirect costs because information provided to capital market participants can also be used by other parties (e.g., competitors, labor unions, regulators, tax authorities, etc.). For example, detailed information about line-of-business profitability can

Managerial appropriation of corporate resources can take many forms, such as outright stealing of cash, the use of excess cash for „pet projects‟ from which the manager derives some private utility, lavish busi ness trips, or simply excessive compensation. 12 At the same time, disclosures can also have adverse real effects and lead to production distortions. Kanoida et al. (2000) and Sapra (2002) illustrate this in the context of hedge disclosures.

disadvantage can dampen its disclosure incentives (Verrecchia, 1983; Gal-Or, 1985). However, a competitive threat may not always induce firms to withhold information. For example,

incumbent firms may disclose information to deter entry by competitors. Firms might also share information about market demand to prevent overproduction in the industry (Kirby, 1988). Furthermore, competitors can infer information from the fact that a firm does not make certain disclosures. Thus, the relation between disclosures and proprietary costs is complex and depends on the type of competition threat (e.g., Vives, 1984; Gal-Or, 1986; Verrecchia, 1990; Wagenhofer, 1990; Feltham et al., 1992). A related argument is that more transparency could be costly to existing financing relationships, especially with banks (e.g. Rajan and Zingales, 1998; Leuz and Oberholzer-Gee, 2006). Relationship financing may require some private information flows between a firm and its bank in order to protect relationship-specific investments that make financing arrangements viable where a firm pays above market in good times but in return obtains credit in bad times. If disclosures put outside financiers on a level-playing field, the relationship is unlikely to survive the forces of competition in good times. Thus, firms that have or seek such financing

relationships are likely to be reluctant to provide full disclosure. In summary, there are numerous direct and indirect reporting and disclosure costs, which in turn are likely to make the optimal amount of disclosure specific to each firm. 2.3. Market-Wide Effects and Externalities of Corporate Disclosure An individual firm‟s disclosure can have effects beyond the firm itself. We refer to those effects as market-wide effects. The competitive effects of corporate disclosure discussed in Section 2.2 are one example. But the effects of corporate disclosure extend beyond competing firms. An individual firm‟s disclosures may have externalities that benefit non-competing firms in other industries by revealing relevant information about new consumer trends, technological 本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。