Journal article

Disclosure of private information and reduction of uncertainty: Environmental liabilities in the chemical industry

K Campbell, SE Sefcik, NS Soderstrom

Review of Quantitative Finance and Accounting | Published : 2003


We investigate the potential uncertainty-reducing role of accounting information in the context of contingent Superfund liability valuation. We first develop theoretical arguments for the way reduction of uncertainty regarding these contingent liabilities is expected to affect security prices. Empirical proxies are developed for two types of uncertainty surrounding contingent Superfund liabilities: site uncertainty and allocation uncertainty. In a valuation framework, we then investigate whether financial statement disclosures and accruals reduce uncertainty and thereby affect security valuation. Specifically, we analyze the interaction of private information contained in firm disclosures an..

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University of Melbourne Researchers

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