{{Accounting}} '''Voluntary disclosure''' is the provision of information by a company's management beyond requirements such as generally accepted accounting principles and Securities and Exchange Commission rules,<ref name=FASB2001>FASB, 2001. [http://www.fasb.org/brrp/brrp2.shtml Improving Business Reporting: Insights into Enhancing Voluntary Disclosures]. Retrieved on April 20, 2012.</ref><ref name=MRG1995>Meek G. K., Roberts C. B., Gray S. J., 1995. Factors Influencing Voluntary Annual Disclosures By U.S., U.K., and Continental European Multinational Corporations. ''Journal of International Business Studies'' 26(3), 555-572.</ref> where the information is believed to be relevant to the decision-making of users of the company's annual reports.<ref name=MRG1995 />
Voluntary disclosure is carried out by many companies,<ref name=FASB2001 /> although the extent and type of voluntary disclosure differs by geographic region, industry, and company size.<ref name=HW2001/> The extent of voluntary disclosure is also affected by the firm's corporate governance structure<ref name=HW2001 /><ref name=EM2003>Eng L.L. & Mak Y.T., 2003. Corporate governance and voluntary disclosure. ''Journal of Accounting and Public Policy'' 22 (2003), 325-345.</ref> and ownership structure;<ref name=EM2003 /> in particular, research has found that top executives have a significant influence on their firms' voluntary disclosures, and that managers have unique disclosure styles related to their personal backgrounds including their career paths and military experience.<ref name = BJW2010>Bamber, Linda Smith, John (Xuefeng) Jiang, and Isabel Yanyan Wang. 2010. “What’s My Style? The Influence of Top Managers on Voluntary Corporate Financial Disclosure.” ''The Accounting Review'' 85 (4).</ref>
Voluntary disclosure has also been identified as an important area in financial reporting research.<ref name=HW2001>Ho, Simon S.M, and Kar Shun Wong. 2001. “A Study of the Relationship Between Corporate Governance Structures and the Extent of Voluntary Disclosure.” ''Journal of International Accounting, Auditing and Taxation'' 10 (2) (June): 139–156.</ref> There are links between firm choices to voluntarily disclose certain information and what they are required to disclose via mandatory disclosures.<ref>Zechman, Sarah L.C. (2010). The relation between voluntary disclosure and financial reporting: Evidence from synthetic leases. Journal of Accounting Research, 48(3), 725-765. doi:10.1111/j.1475-679X.2010.00376.x</ref>
==Overview and practices==
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== Costs and benefits== Voluntary disclosure benefits investors, companies and the economy; for example, it helps investors make better capital allocation decisions and lowers firms' cost of capital, the latter of which also benefits the general economy.<ref name=FASB2001 /><ref name=MRG1995 /> It may also reduce conflicts of interest in widely held firms.<ref name=CG2002>Chau G.K. & Gray S.J., 2002. Ownership structure and corporate voluntary disclosure in Hong Kong and Singapore. ''The International Journal of Accounting'' 37 (2002), 247-265.</ref>
Voluntary disclosure is also affected by shareholder demands; for example 60 percent of the companies on the S&P 100 adopted voluntary disclosure policies in response to shareholder demand for information on corporate political spending.<ref name = "NYT 2012">{{cite web |url=https://dealbook.nytimes.com/2012/12/17/voluntary-disclosure-on-corporate-political-spending-is-not-enough/?_r=0 |title=Voluntary Disclosure on Corporate Political Spending Is Not Enough |last1=Bebchuk |first1=Lucian A. |last2=Jackson Jr. |first2=Robert |date=17 December 2012 |website=DealBook |publisher=The New York Times Company |access-date=12 January 2014}}</ref>
Firms, however, balance the benefits of voluntary disclosure against the costs, which may include the cost of procuring the information to be disclosed, and decreased competitive advantage.<ref name=FASB2001 /><ref name=MRG1995 />
==Regulatory and academic opinion==
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==Types and examples== Voluntary disclosures can include strategic information such as company characteristics and strategy, nonfinancial information such socially responsible practices, and financial information such as stock price information.<ref name=MRG1995 /> The Financial Accounting Standards Board classified voluntary disclosures into the six categories below,<ref name=FASB2001 /> while Meek, Roberts and Gray (1995) classified them into three major groups: strategic, nonfinancial and financial information.<ref name=MRG1995 /> ;Business data:For example, a breakdown of market share growth and information on new products. ;Analysis of business data:For example, trend analyses and comparisons with competitors. ;Forward-looking information:For example, sales forecast breakdowns and plans for expansion. ;Information about management and shareholders:For example, information on stockholders and creditors, and shareholding breakdowns. ;Company background:For example, product descriptions and long-term objectives. ;Information about intangible assets:For example, research and development and customer relations.<ref name=FASB2001 /> Intellectual Capital Disclosures are prevalent among many knowledge-based companies and are used to help stakeholders understand how an organization uses its knowledge, skills, relationships, and processes to create value.<ref>{{Cite journal|last=Jan Mouritsen|last2=Per Nikolaj Bukh|last3=Bernard Marr|date=2004-03-01|title=Reporting on intellectual capital: why, what and how?|journal=Measuring Business Excellence|volume=8|issue=1|pages=46–54|doi=10.1108/13683040410524739|issn=1368-3047}}</ref>
==References== <references />
Category:Accounting research Category:Accounting terminology