On the Disclosure of Half-Truths and the Duty to Update

Anne Beyer*, Ronald A. Dye

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

We develop a model of a manager’s equilibrium voluntary disclosure policy to study how that policy changes depending on whether the manager is prohibited from disclosing, or allowed to disclose, a half-truth; we also examine how the disclosure policy changes depending on whether the manager has a duty to update past disclosures. Among our results, we show that if a manager is prohibited from issuing half-truths, the manager discloses a wider array of information than if the manager is allowed to issue half-truths, and investors view the absence of disclosure more skeptically; we also show that imposing a duty to update on the manager does not affect the manager’s initial disclosures, but it results in the manager disclosing uniformly more information over time.

Original languageEnglish (US)
Pages (from-to)4283-4311
Number of pages29
JournalManagement Science
Volume69
Issue number7
DOIs
StatePublished - Jul 2023

Keywords

  • duty to update
  • half-truths
  • stock prices
  • voluntary disclosures

ASJC Scopus subject areas

  • Strategy and Management
  • Management Science and Operations Research

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