Experimental economics and empirical testing of discretionary disclosure theory

This article surveys the empirical testing of discretionary disclosure theory. Currently, few studies achieve strict controlled tests of identifiable disclosure models. This occurs primarily because live stock market data fail to describe the analytical environment of discretionary disclosure. Traditional archival study precludes the identification of private information receipt and the observability of managerial disclosure action. Empiricists find it necessary to use experimentationas the primary methodology for this research. Experiments provide the ability to observe the dynamics of disclosure decisions, to control the information used inmaking disclosures, and to develop the empirical environment specified by theory.