Supervisors frequently use formal enforcement tools to intervene in banks’ financial reporting. However, when managers exercise their discretion within the boundaries of accounting rules, supervisors have to turn to soft and informal actions to nudge, rather than force banks to change their...

This paper examines why firms choose to be financially transparent or opaque by conducting a field experiment with more than 25,000 private firms in Germany. We inform a randomly chosen set of treatment firms about a disclosure option that allows eligible firms to restrict access to their...