However, extensive research has been done in order to determine the true factors that push corporations and management into utilizing voluntary disclosure, and the six top results have been widely utilized in varying circumstances in order to gauge motive and success. The first result has been labeled the capital markets transactions hypothesis, which suggests that investors' perceptions of a firm are important to corporate managers expecting to issue public debt or equity or to acquire another company in a stock transaction (Healy and Palepu 2008, pp.405). Therefore, in order to avoid asymmetry, managers instead anticipate making capital market transactions have an additional incentive to provide voluntary disclosure in order to reduce the information asymmetry problem at stake, thereby reducing the firm's cost of external financing.

This hypothesis is followed by the corporate control hypothesis, which is motivated by empirical evidence that boards of directors and investors alike hold managers accountable for current stock performance. In this instance, voluntary disclosure of accounting is used by managers in order to reduce the likelihood of under-evaluation while maintaining the capacity to explain away poor earnings performances with clear and publically-provided data. Additionally is the stock compensation hypothesis, which notes that managers are also directly rewarded using a variety of sock-based compensation plans, such as stock option grants, and stock appreciation rights, which provide incentives for managers to encourage voluntary disclosures in order to: meet restrictions imposed by insider trading rules and to increase liquidity of the firm's stock (Healy and Palepu 2008, pp.407). Next comes the litigation cost hypothesis, which mirrors the aforementioned tactic of managers to release information to the public before legal action against the company for any reason could bring such information to light.

Finally, in viewing what research suggests to be the main reasons companies choose to disclose accounting voluntarily, two final understandings of motive and success are widely utilized. The management talent signaling hypothesis argues that managers and companies have an incentive to make voluntary earnings forecasts to reveal their type and place in the market. In disclosing accounting information, managers believe that they have an increased ability to anticipate future changes, and in turn, increase the firm's market value. Also widely noted is the proprietary cost hypothesis, which asserts that firms' decisions to disclose information to investors is largely due to the concern that such disclosures can damage their competitive position in the product market. As described previously, the tactics a company utilizes dependent upon their position in a large market or a priced market can determine the tactics companies take in making their information readily available to the public when competing. The hypothesis at hand notes that in releasing information, consumers have an increased understanding of the firms at stake, and therefore an increased interest in becoming involved with these companies -- for example, in supporting or purchasing stock in these companies.

Voluntary Disclosure and Agency Costs

Voluntary disclosure has further been thought to be directly correlated to agency costs within a corporation, but evidence as to how closely these two facets of operation are related remains to be seen. To more closely examine the relationship that may exist, one must first understand the basis of agency costs as a concept, which in turn can be aligned with previously-garnered information on voluntary disclosure.

An agency cost is an economic concept that relates the cost incurred by an organization associated with problems such as divergent management-shareholder objectives and information asymmetry (Cohen and Webb, 2007, pp.302). The costs generally consist of two main sources: the costs inherently associated with using an agent (i.e. The risk that agents will use organizational resources for their own benefit), and the costs of techniques used to mitigate the problems associated with using an agent (i.e. The costs of producing financial statements or the use of stock options to align executive interests to shareholder interests) (Cohen and Webb 2007, pp.302).

In beginning to assess the correlation between the two, one can cite the reduction in costs that has been seen by many companies who have begun to utilize voluntary disclosure through company websites and additional internet-based technology. Many corporate internet sites provide a detailed and frequently updated overview of a company's acquired assets and performance, through reviews, press releases, stock quotes, frequently asked investor related questions, earnings forecasts by financial analysts, as well as annual reports and SEC reports (Healy and Palepu 2008, pp. 410). Further, an ever-increasing use of the internet by investors and stakeholders is a concept that appears to be solidified into corporate financial culture, asserting that should companies continue to utilize such means of disclosure, other agency costs will be reduced, especially in...

Therefore, companies and firms voluntarily place more information on their respective websites because doing so reaps the economic advantages of reducing agency costs and the cost of capital (Pendley and Rai 2009, p.89).
Historically, many agency costs were due to a lack of information available to investors. However, as research suggests that managers with superior knowledge of firm performance can increase voluntary disclosure to non-management investors and reduce agency costs, and therefore increase firm value, which empirical research further appears to support (Baek, Johnson, and Kim 2009, pp. 48).

Conclusion

To conclude, one can discern that the voluntary disclosure of accounting information not only reduces information asymmetry between stakeholders and the market itself, but reduces agency costs by utilizing technology and allowing stakeholders and investors consistent access to information that was once only afforded them in limited means. In understanding the ongoing status of a company in terms of its accounting assets, investors are increasingly likely to place more capital into a company, increasing profits and presence in the market. Additionally, empirical research has shown that not only does voluntary disclosure benefit each respective company who chooses to utilize it, but such disclosure standards are increasingly becoming the way of the future in terms of standards and corporate governance.

In assessing the tactic of voluntary disclosure of accounting information within the financial field, onlookers and corporate managers alike have the research needed to understand the benefits that voluntary disclosure brings not only to a company, but to every individual and entity associated with that company. As companies across the globe continue to find themselves in the headlines under public scrutiny for withholding operational tactics and accounting statistics from investors, the option to adhere to voluntary disclosure standards is one that is becoming ever more appealing to companies on an international basis. And such widespread use of this tactic should prove nothing but beneficial to companies who assert through its use their own adherence to the standards of honesty, integrity, and enhanced transparency within their operation.

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