Litigation/proprietary costs. A priori, the magnitude of potential costs a firm faces because of disclosure is difficult to assess since it requires the identification of all parties that may use information to the firm's detriment. However, a firm's financial condition does provide a measure of its willingness to release proprietary information, since only firms that are financially sound may be able to trade off the benefits from additional disclosure with the costs of revealing potentially damaging information. Four variables proxy for afirm’s ability to support proprietary costs:
1. leverage ;
2.profitability ;
3. US listing; and
4. firm size.