When you talk, I remain silent: Spillover effects of peers' mandatory disclosures on firms' voluntary disclosures

2021 ◽  
Author(s):  
Matthias Breuer ◽  
Katharina Hombach ◽  
Maximilian A. Müller
Keyword(s):  
Spillover Effects ◽  
Information Environment ◽  
Voluntary Disclosures ◽  
Disclosure Regulation ◽  
Information Spillovers ◽  
Regulated Firms ◽  
Regulatory Information ◽  
Crowd Out

We predict and find that regulated firms' mandatory disclosures crowd out unregulated firms' voluntary disclosures. Consistent with information spillovers from regulated to unregulated firms, we document that unregulated firms reduce their own disclosures in the presence of regulated firms' disclosures. We further find that unregulated firms reduce their disclosures more the greater the strength of the regulatory information spillovers. Our findings suggest that a substitutive relationship between regulated and unregulated firms' disclosures attenuates the effect of disclosure regulation on the market-wide information environment.

Interest Groups and Regulatory Capture

2019 ◽  
pp. 584-603
Author(s):  
William F. Shughart ◽  
Diana W. Thomas
Keyword(s):  
Interest Groups ◽  
Empirical Studies ◽  
Spillover Effects ◽  
Revolving Door ◽  
Regulatory Agencies ◽  
Special Interest Groups ◽  
Economic Regulation ◽  
Regulatory Capture ◽  
Market Outcomes ◽  
Regulated Firms

Economic orthodoxy before 1971 suggested that regulatory intervention could improve on market outcomes in cases of market power, negative spillover effects, or asymmetric information. That orthodoxy was overturned in 1971 with the publication of George Stigler’s “Theory of Economic Regulation,” which concludes that regulatory agencies are vulnerable to capture by special interest groups who shape regulatory outcomes in ways that benefit the regulated industry itself at consumers’ expense. Many empirical studies have since then confirmed Stigler’s theoretical insights. This chapter summarizes the major theoretical and empirical contributions to the literature on economic regulation, provides an overview of the various groups that can capture the regulatory process, and summarizes more recent contributions highlighting regulation’s regressive effects and the “revolving door” between regulatory agencies and regulated firms.

Information Spillovers: Another Look at Experimental Estimates of Legislator Responsiveness

2014 ◽  
Vol 1 (2) ◽  
pp. 159-169 ◽  
Author(s):  
Alexander Coppock
Keyword(s):  
Field Experiment ◽  
Causal Effect ◽  
Spillover Effects ◽  
Quarterly Journal ◽  
Analytic Framework ◽  
Information Spillovers ◽  
Experimental Intervention ◽  
Indirect Treatment ◽  
Voting Decisions ◽  
Share Information

AbstractA field experiment carried out by Butler and Nickerson (Butler, D. M., and Nickerson, D. W. (2011). Can learning constituency opinion affect how legislators vote? Results from a field experiment. Quarterly Journal of Political Science 6, 55–83) shows that New Mexico legislators changed their voting decisions upon receiving reports of their constituents’ preferences. The analysis of the experiment did not account for the possibility that legislators may share information, potentially resulting in spillover effects. Working within the analytic framework proposed by Bowers et al. (2013), I find evidence of spillovers, and present estimates of direct and indirect treatment effects. The total causal effect of the experimental intervention appears to be twice as large as reported originally.

Does the Firm Information Environment Influence Financing Decisions? A Test Using Disclosure Regulation

2016 ◽  
Vol 62 (2) ◽  
pp. 456-478 ◽  
Author(s):  
Susan Albring ◽  
Monica Banyi ◽  
Dan Dhaliwal ◽  
Raynolde Pereira
Keyword(s):  
Information Environment ◽  
Disclosure Regulation ◽  
Financing Decisions ◽  
Environment Influence

Private Earnings Guidance and Its Implications for Disclosure Regulation

2007 ◽  
Vol 82 (5) ◽  
pp. 1299-1332 ◽  
Author(s):  
Isabel Yanyan Wang
Keyword(s):  
Information Environment ◽  
Economic Consequences ◽  
Information Costs ◽  
Earnings Guidance ◽  
Regulation Fair Disclosure ◽  
Significant Deterioration ◽  
Disclosure Regulation ◽  
Exogenous Shock ◽  
Proprietary Information ◽  
Fair Disclosure

This study investigates three related questions: (1) Why did some firms provide private earnings guidance to analysts before Regulation Fair Disclosure? (2) How did the exogenous shock of Regulation Fair Disclosure affect these firms' disclosure policies? (3) What are the economic consequences of this disclosure regulation? To address these questions, I develop a new measure of private earnings guidance. Consistent with theory, I find that firms were more likely to provide private earnings guidance if they had higher proprietary information costs, and if their earnings were more predictive of other firms' earnings. Policymakers enacted Regulation Fair Disclosure to stop private earnings guidance, but they also intended for managers to replace private earnings guidance with public earnings guidance, thereby improving the information environment. However, I find that roughly half of the firms that I classify as relying more on private earnings guidance replace private earnings guidance with non-disclosure instead of public earnings guidance, and as a result, these firms suffer significant deterioration in their information environments. Consistent with theory, firms are more likely to replace private earnings guidance with nondisclosure if they have lower information asymmetry and higher proprietary information costs. On the other hand, firms that replace private earnings guidance with public earnings guidance, on average, prevent significant deterioration in their information environments. Evidence that firms respond to disclosure regulation as predicted by theory can help policymakers anticipate which firms' information environments are likely to be adversely affected by new disclosure regulations.

Does Stricter Disclosure Regulation of Private Meetings Improve the Information Environment?

2020 ◽  
Author(s):  
Robert M. Bowen ◽  
Shantanu Dutta ◽  
Songlian Tang ◽  
Pengcheng Zhu
Keyword(s):  
Information Environment ◽  
Disclosure Regulation

Does Business Strategy Impact a Firm’s Information Environment?

2017 ◽  
Vol 34 (4) ◽  
pp. 563-587 ◽  
Author(s):  
Kathleen A. Bentley-Goode ◽  
Thomas C. Omer ◽  
Brady J. Twedt
Keyword(s):  
Information Asymmetry ◽  
Business Strategy ◽  
Information Environment ◽  
External Information ◽  
Growth Options ◽  
Earnings Guidance ◽  
Press Releases ◽  
Voluntary Disclosures ◽  
Information Intermediaries ◽  
External Sources

This study examines whether a firm’s business strategy affects their information environment. Organizational theory suggests that firms following an innovative “prospector” strategy have greater incentives to provide more frequent voluntary disclosures than firms following an efficient “defender” strategy. Furthermore, prospectors are more likely to attract greater coverage by external information intermediaries. We find that prospectors engage in more frequent management earnings guidance, issue more press releases, and are followed by more financial analysts compared with defenders. Next, we examine the association between business strategy and information asymmetry. We find that despite prospectors having attributes associated with information asymmetry (e.g., R&D, growth options), prospectors have lower information asymmetry than defenders. We attribute this finding to prospectors’ greater access to both internal and external sources of disclosure compared with defender firms, which we confirm using mediation analysis. Collectively, our results suggest that business strategy does affect firms’ information environments, incremental to known determinants, and that strategy serves as a useful context for understanding a firm’s underlying information environment.

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