Costs and Benefits of Business Information Disclosure.

Abstract This article analyzes costs and benefits of disclosures of information by profit-making enterprises. Some parties might benefit and others might suffer from any disclosure, though it is also true that some disclosure is immaterial in cost and in effect. The types of costs and benefits are economic, political, social, and ethical. Parties may be affected by both costs and benefits. For example, the costs of corporate disclosure are borne by owners, but they are also beneficiaries of the disclosure they pay for. Financial report users do not neatly share in costs and benefits. Although owners pay for corporate disclosure, stock market investors considering ownership are free riders who pay nothing at all. The interests of owners and employees can be different, but both share a dominating interest in maximizing long-term cash flow. The bigger the pie, the larger the shares to be divided, whether cooperatively or through conflict. Low disclosure generally results in a high information risk premium, and high disclosure generally results in a low information risk premium.