A grounded theory of corporate disclosure

Abstract This paper outlines a grounded theory of corporate disclosure comprising, disclosure choices, the story of value creation and intangibles, managerial optimism and opportunism, benchmarking, and of continuous corporate interaction with stock and information markets. The disclosure activity led to cumulative corporate learning about perceived market outcomes and their ‘fragility’. This was reinforced by fund managers during subsequent one to one meetings. The interaction and learning fed back into cumulative corporate understandings and experiences (priors) of their disclosure behaviour which then became drivers of subsequent disclosure. These interactions and the corporate responses revealed the dynamic element to corporate disclosure behaviour. The emphasis on choice, private disclosure, knowledge intensive intangibles, stories, benchmarking, feedback, learning, outcomes, response and many other elements in the theory are interpreted as tentative means to deal with a new enhanced information asymmetry which can be considered to be at the heart of the disclosure and valuation crises observed in financial markets in the period 1997–2003. The research was conducted through case interview field work in 25 large UK companies during 2000 and use was made of archival sources. A grounded theory approach was employed in processing the data. The results were discussed relative to relevant literature and to previous grounded theory of corporate disclosure behaviour. Areas for further research were identified.