{"id":3324,"date":"2014-03-23T20:38:34","date_gmt":"2014-03-24T04:38:34","guid":{"rendered":"http:\/\/hodakvalue.com\/blog\/?p=3324"},"modified":"2014-03-23T20:52:30","modified_gmt":"2014-03-24T04:52:30","slug":"disclosure-too-much-of-a-good-thing","status":"publish","type":"post","link":"http:\/\/hodakvalue.com\/blog\/disclosure-too-much-of-a-good-thing\/","title":{"rendered":"Disclosure:  Too much of a good thing?"},"content":{"rendered":"<p><img loading=\"lazy\" decoding=\"async\" class=\"shrinkToFit decoded\" src=\"http:\/\/hdw9.com\/wp-content\/uploads\/2013\/07\/dubai-in-the-fog-wallpaper.jpg\" alt=\"http:\/\/hdw9.com\/wp-content\/uploads\/2013\/07\/dubai-in-the-fog-wallpaper.jpg\" width=\"482\" height=\"270\" \/><\/p>\n<p>Transparency has its benefits.\u00a0 It enables shareholders to see into the company they own, and thereby judge whether it&#8217;s worth owning.\u00a0 The main mechanism for transparency in the corporate world is company disclosures.\u00a0 Does that mean that more disclosure is better?\u00a0 <a href=\"http:\/\/online.wsj.com\/news\/articles\/SB10001424052702304026304579453712116558776?mod=Markets_newsreel_3\">This article<\/a> suggests otherwise:<\/p>\n<blockquote><p><em>In a coming paper in the Journal of Finance,  Messrs. Loughran and McDonald suggest that size may be what really  matters. They studied 66,707 10-Ks filed for the years 1994 through  2011. Controlling for factors including size and industry\u2014bigger or  highly regulated companies naturally file longer 10-Ks\u2014they looked at  how well the stock market appeared to read the performance of companies  with lengthy filings.<\/em><\/p>\n<p><em>Answer: Not so well.<\/em> <em>In the weeks after filing, shares of those with longer reports tended to be more volatile than those favoring brevity.<\/em><\/p><\/blockquote>\n<p>Somewhere along the line, disclosure became synonymous with transparency.\u00a0 Particularly in eyes of many governance mavens.\u00a0 Perhaps that&#8217;s because, since 1933 at least, the ability to compel disclosure has been the main tool in the federal regulatory tool chest.\u00a0 When you have a hammer&#8230;<\/p>\n<p>I often introduce the <a href=\"http:\/\/papers.ssrn.com\/sol3\/papers.cfm?abstract_id=991044\">Enron case<\/a> with its 10-K from the year before the firm&#8217;s implosion.\u00a0 It&#8217;s difficult to go through that tome, including the volume of data on its infamous Special Purpose Entities, and claim that insufficient disclosure was the culprit.\u00a0 Their management accurately, if literally, conveyed the complexity of its operations.<\/p>\n<p><a href=\"http:\/\/papers.ssrn.com\/sol3\/papers.cfm?abstract_id=1920411\">This new study<\/a> begins to explain how disclosure is not the same thing as transparency, and why the &#8220;more is better&#8221; instinct may be leading us astray.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Transparency has its benefits.\u00a0 It enables shareholders to see into the company they own, and thereby judge whether it&#8217;s worth owning.\u00a0 The main mechanism for transparency in the corporate world is company disclosures.\u00a0 Does that mean that more disclosure is better?\u00a0 This article suggests otherwise: In a coming paper in the Journal of Finance, Messrs. [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27,10],"tags":[],"class_list":["post-3324","post","type-post","status-publish","format-standard","hentry","category-governance","category-invisible-trade-offs"],"_links":{"self":[{"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/posts\/3324","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/comments?post=3324"}],"version-history":[{"count":7,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/posts\/3324\/revisions"}],"predecessor-version":[{"id":3330,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/posts\/3324\/revisions\/3330"}],"wp:attachment":[{"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/media?parent=3324"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/categories?post=3324"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/tags?post=3324"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}