INFORMATION QUALITY AND VOLUNTARY DISCLOSURE

This paper examines the voluntary disclosure of nonproprietary informa tion using the model of uncertain information endowment developed by D ye (1985) and Farrell (1986), and extended by Jung and Kwon (1988). Th e paper focuses on a broad family of functions relating the probabilit y of information acquisition to ex post information quality. The paper shows that for each function there is some region that displays a neg ative relation between ex ante information quality and the frequency o f disclosure. In addition, a sub-family of functions is identified for which ex ante information quality and the frequency of disclosure are negatively related everywhere. These results indicate that the econom ic intuition that higher informational asymmetry is accompanied by mor e voluntary disclosure is not generally true.