Persuading Multiple Audiences : Strategic Complementarities and (Robust) Regulatory Disclosures

How much information about financial institutions' balance sheets should regulators pass on to the market? To minimize the probability of inefficient default, the regulator optimally designs a disclosure regime that imposes transparency when the firm has weak fundamentals and opacity, otherwise. Intuitively, strategic complementarities among the investors, which are exacerbated by financial constraints, induce a preference for granular disclosures. The optimal policy is robust to investors' adversarial coordination and to the firm's agency, and remains optimal even if the firm can circumvent regulation and signal residual private information to the market. My results shed light on the optimal design of regulatory disclosures in environments with strategic complementarities, and provide a foundation for many empirical regularities found in practice