The Usefulness and Limited Supply of Disclosure Accessibility

Firm disclosures are mostly unstructured and textual, imposing substantial processing costs on investors. We examine firms’ incentives to enhance the accessibility of these disclosures by expending resources to make them easier for investors to process. We show that an equilibrium with a positive supply of accessibility can be difficult to sustain—even though investors view accessibility as a favorable signal of firm productivity. We further explore how the supply of accessibility interacts with the quality of the numerical (easier-to-analyze) signals and textual (harder-to-analyze) disclosures. Our analysis generates predictions consistent with empirical evidence and offers a framework for evaluating policy initiatives and accounting standards aimed at improving accessibility. This paper was accepted by Ranjani Krishnan, accounting.