ABSTRACT
This chapter provides a general introduction to the issue of voluntary annual report disclosure by means of a survey of the theoretical literature on disclosure of accounting information. It illustrates the capacity of the disclosure literature to develop, on the basis of a relatively small number of basic themes, an almost limitless number of variations. A useful approach to voluntary disclosure at a high level of abstraction is by the type of economic modelling known as game theory. Game theory has been increasingly used during the 1970s and 1980s in disciplines such as finance and accounting. Its application to voluntary disclosure in a financial reporting context dates from the middle 1970s. Whereas a game-theoretical approach has not yet resulted in a model of long-term aspects of voluntary disclosure, a slightly different approach based on the notion of agency relationships has to some extent filled the gap between theoretical modelling and the practice of financial reporting.
