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Valuing voluntary disclosure using a real options approach

Delaney, L. & Thijssen, J. (2011). Valuing voluntary disclosure using a real options approach (11/06). London, UK: Department of Economics, City University London.


This paper outlines a real options approach to valuing those announcements which are made by firms outside of their legal requirements. From the firm's perspective, information is disclosed only if the manager of the firm is sufficiently certain that the market response to the announcement will have a positive impact on the value of the firm.

When debt financing is possible we find that the manager adopts a more transparent disclosure policy, thus violating the Modigliani-Miller theorem on irrelevance of capital structure.

Publication Type: Monograph (Discussion Paper)
Additional Information: © 2011 the authors.
Publisher Keywords: Voluntary disclosure, real options, Modigliani-Miller theorem
Subjects: H Social Sciences > HB Economic Theory
Departments: School of Policy & Global Affairs > Economics > Discussion Paper Series
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