Speaker: Prof. Keri Hu (HKU Business School, The University of Hong Kong)

Title: Voluntary Disclosure, Investment Externality, and Public Information

Date: Wednesday, May 27, 2026

Time: 4:30 PM - 5:50 PM

Venue: 90402 International Hall

Abstract

We study voluntary disclosure in a two-firm model in which firms’ investments exhibit complementarity. Before investment takes place, one firm may privately observe information about its investment opportunity and may disclose it in the presence of a public signal. Beyond providing information, disclosure affects the firms’ investment incentives. We show that the equilibrium disclosure probability is weakly increasing in the public signal. The informed firm discloses only when it makes a positive investment. If the public signal is low, neither firm invests following no disclosure. The potentially informed firm begins to invest first as its private signal becomes more favorable. If the public signal is in an intermediate range, only the peer firm invests following no disclosure, while the potentially informed firm invests only after disclosure. If the public signal is high, both firms invest regardless of whether disclosure occurs. In the intermediate region, the disclosure probability increases with the strength of investment complementarity.