A Theory of Risk Disclosure
نویسندگان
چکیده
In this paper, we consider the pricing effects of noisy risk disclosure. We show that uncertainty over the riskiness of a firm’s cash flows is priced and that risk disclosure decreases the cost of capital in both single and multi-asset settings. We find that mean and risk disclosure are substitutes, and that firms acquire and disclose more risk information when they discover that risks are high. A Theory of Risk Disclosure
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