Kenneth Arrow argued that trust is the lubricant of an economy (Arrow, 1974). Alan Greenspan describes trust as the root of any economic system based on mutually beneficial exchange (Greenspan, 1999). Theory and evidence on how and why trust as a lubricant for exchange arises is, however, just beginning to be developed. This Doctoral Dissertation Improvement research contributes to this effort. It focuses on voluntary disclosure in the form of financial reporting. The research will examine, both theoretically and experimentally, how the opportunity to make voluntary disclosures enhances the building of trust and trustworthiness to facilitate institutions for exchange and investment. The research will contribute to our understanding of how accounting practices evolve to facilitate new exchange and investment opportunities.
