Optimal Disclosure Timing

We develop a model of disclosure timing in which the firm can commit to disclose at a fixed date, a time-based disclosure policy, or after a certain number of events have occurred, an event-based disclosure policy. We show that the firm trades off price variance and ``internalization" when making its disclosure timing decision: choosing to disclose later increases the impact that the disclosure will have on prices, but limits the time horizon over which the firm can internalize the benefits of this price movement. With time-based disclosure, more uncertainty over beliefs induces front-loaded (earlier) disclosure. When the disclosure policy is event-based, the threshold is relatively more stringent when individual transactions contain less information. Finally, we show that a mixture between the time-based and event-based disclosure policies is weakly dominant: the firm follows an event-based disclosure policy to start, but commits to disclose some news at a fixed date if no disclosure has been made before that date.