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Preprints, Working Papers, ... Year : 2018

Strategic Withholding and Imprecision in Asset Measurement

Jeremy Bertomeu
  • Function : Author
Edwige Cheynel
  • Function : Author


How precise should accounting measurements be, if management has discretion to strategically withhold? We examine this question by nesting an optimal persuasion mechanism, which controls what measurements are conducted, within a voluntary disclosure framework a la Dye (85) and Jung and Kwon (1988). In our setting, information has real effects because the firm uses it to make a continuous operating decision, increasing in the market's belief. Absent frictions other than uncertainty about information endowment, we show that imprecision can reduce strategic withholding but always decreases firm value. We then examine plausible environments under which, by contrast, there is an optimal level of imprecision featuring coarseness at the marginal discloser. We offer additional implications in the contexts of enforcement against strategic withholding and financing with collateralized assets.

Dates and versions

hal-02896007 , version 1 (10-07-2020)





Jeremy Bertomeu, Edwige Cheynel, Davide Cianciaruso. Strategic Withholding and Imprecision in Asset Measurement. 2018. ⟨hal-02896007⟩


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