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Does Voluntary Disclosure Improve Stock Price Informativeness

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Words 10226
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Does Voluntary Disclosure Improve Stock Price Informativeness?
Author(s): K. Stephen Haggard, Xiumin Martin and Raynolde Pereira
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Source: Financial Management, Vol. 37, No. 4 (Winter, 2008), pp. 747-768
Published by: Blackwell Publishing on behalf of the Financial Management Association International
Stable URL: http://www.jstor.org/stable/20486678 .
Accessed: 25/07/2012 04:27
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Does

Voluntary
Stock Price

Disclosure

Improve
Informativeness?

K. Stephen Haggard, Xiumin Martin, and Raynolde Pereira*
According to theory, comovement in stock prices reflects comovement in thefundamentalfactors underlying the values ofstocks. Recent theory contends that stockprice comovement can be driven by information markets or the informational opacity of the firm. To the extent that voluntary disclosure reduces information acquisition cost and enhances firm transparency, we predict that enhanced voluntary disclosure reduces stockprice comovement. Weprovide evidence in support of thisprediction using analyst evaluation offirm disclosure policy. Overall, our evidence supports the effectiveness offirm disclosure policy in increasing the amount

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