William Larimer Mellon, Founder
Schenley Park
Pittsburgh, Pennsylvania 15213-3890
United States of America
Pierre Jinghong Liang
Associate Professor of Accounting
VOLUNTARY DISCLOSURE ALONG BUSINESS
CYCLES
Jeremy Bertomeu
Baruch College
Pierre Jinghong Liang
Carnegie Mellon University
Accepted by Management Science March 2014
In the model, firms may be informed about upcoming demand in advance of their competitors
and decide whether or not to publicly disclose that information. We examine the
cyclical behavior of disclosures, and their association with price-setting behavior and industry
profits. We show that, in industries that are highly concentrated and/or feature lower
cost of capital, no-disclosure is prevalent and associated with acyclical product prices and
higher profits. Otherwise, disclosure occurs in normal times, while no-disclosure occurs
prior to either sharp industry expansions or industry declines. Consequently, strategic disclosure
can work to reduce early dissemination of information about the cycle.