Limited attention, information disclosure, and financial reporting

David Hirshleifer, Siew Hong Teoh
2003 Journal of Accounting & Economics  
This paper models firms' choices between alternative means of presenting information, and the effects of different presentations on market prices when investors have limited attention and processing power. In a market equilibrium with partially attentive investors, we examine the effects of alternative: levels of discretion in pro forma earnings disclosure, methods of accounting for employee option compensation, and degrees of aggregation in reporting. Abstract This paper models firms' choices
more » ... etween alternative means of presenting information, and the effects of different presentations on market prices when investors have limited attention and processing power. In a market equilibrium with partially attentive investors, we examine the effects of alternative: levels of discretion in pro forma earnings disclosure, methods of accounting for employee option compensation, and degrees of aggregation in reporting.
doi:10.1016/j.jacceco.2003.10.002 fatcat:ntv3lgvdznd4hjqb6gnbmpiglm