By altering different parameters and assumptions underlying the model,
this section analyzes how the likelihood of voluntary disclosure occurrence
relates to various features of the mandatory disclosure environment and the
disclosure regulation.13 In particular, the discussion focuses on four fundamental
features—the realization of mandatory disclosure, the informational
quality of mandatory disclosure, the level of discretion in mandatory reporting,
and the scope of disclosure requirements. This analysis is important
because a proper evaluation of mandatory disclosure rules must be made
in light of their total effect on a firm’s disclosures (both mandatory and
voluntary).