Voluntary Disclosure Commitment and Firm Investment

Theory suggests a commitment to voluntary disclosure may improve firm investment over time. Our findings support this argument. We document that voluntary disclosure commitment is associated with the more profitable exercise of firm investment opportunities. Additionally, prior research hypothesizes that voluntary disclosure can reduce both under- and over-investment. We document that commitment to voluntary disclosure is associated with greater investment efficiency. Results are robust to controls for accounting quality and other determinants of investment efficiency, as well as adjustments for endogeneity in the voluntary disclosure decision. Together, our findings highlight the benefits of voluntary disclosure commitment as they pertain to firm investment.