Financial reporting, disclosure, and corporate governance

Information serves an important role in the governance process and, despite the presence of disclosure regulations, there are many private and public firms that voluntarily provide more information than required. This chapter considers the advantages and disadvantages of voluntary disclosure at the firm and societal levels. It studies the empirical literature on the connection between a firm’s disclosure policies and its corporate governance, which reveals mixed evidence. The chapter determines that unforeseen events may be important and calls for further studies on disclosure in private firms