Needed: bankruptcy-related disclosures
Disclosures must adequately cover the essential information required by investors to make informed investment decisions
The importance of disclosures in combating information asymmetry, enabling informed investor decisions and reducing information costs, is well established. Ongoing disclosures, in particular, ensure that investors are continually aware of the economic stability of a company. These disclosures have added importance in the context of insolvency and bankruptcy. In fact, a recent study showed that bankrupt companies had lower disclosure quality than other companies.