ABSTRACT
The Ebert, Simons, and Stecher (2017) disclosure model predicts that weaker firms, i.e., those that have lower operating performance, will make more disaggregated discretionary disclosures than stronger firms, a result somewhat at odds with traditional discretionary disclosure theory that predicts that stronger firms are more likely to voluntarily disclose. We use the IPO S-1 filing setting to test Ebert et al. (2017) and find that higher S-1 disaggregated discretionary disclosure quantity is significantly associated with lower operating performance. Our setting and analyses also plausibly rule out several alternative explanations.
JEL Classifications: G30; K22; M40.
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2025
