The Nature of the Interaction between Mandatory and Voluntary Disclosures


  • This paper is partially drawn from my doctoral thesis at Tel Aviv University. I am grateful to Zvi Safra, my dissertation advisor, for his guidance and help. I also appreciate the helpful comments and suggestions of Gil Aharoni, Eli Amir, Ray Ball (the editor), Avraham Beja, Shimon Benninga, Amihud Dotan, Michael Kirschenheiter, Gilad Livne, Dan Weiss, Avi Wohl, and especially Amir Ziv and an anonymous referee. Finally, I would like to thank participants in the 2004 American Accounting Association annual meeting and in seminars at the Interdisciplinary Center Herzliya, Tel Aviv University, and the University of Haifa.


This paper demonstrates the crucial role that firms' mandatory disclosures play in determining their voluntary disclosure strategies. It also shows how a firm's propensity for providing voluntary disclosures relates to various features of the mandatory disclosure environment and disclosure regulation. The special case of choosing between aggregated and disaggregated disclosures serves as an illustration of the model's applicability.