The impact of regulation Fair Disclosure on investors' prior information quality — Evidence from an analysis of changes in trading volume and stock price reactions to earnings announcements

The impact of regulation Fair Disclosure on investors' prior information quality — Evidence... We document that Regulation Fair Disclosure has reduced differences in information quality between investors prior to quarterly earnings announcements consistent with the intent of the regulation. This reduction is driven by small firms and high technology firms, rather than the large firms targeted by the SEC, which suggests that selective disclosure among large firms may have been much more limited than what was presumed by proponents of FD. In addition, we document that FD has decreased the average information quality of investors in small and high technology firms in the period prior to an earnings announcement while having no lasting effect on other firms. Taken together these two results suggest that, for small and high technology firms, FD succeeded in eliminating selective disclosure but also lowered the average quality of information available about these firms. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Corporate Finance Elsevier

The impact of regulation Fair Disclosure on investors' prior information quality — Evidence from an analysis of changes in trading volume and stock price reactions to earnings announcements

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Publisher
Elsevier
Copyright
Copyright © 2007 Elsevier B.V.
ISSN
0929-1199
D.O.I.
10.1016/j.jcorpfin.2006.11.003
Publisher site
See Article on Publisher Site

Abstract

We document that Regulation Fair Disclosure has reduced differences in information quality between investors prior to quarterly earnings announcements consistent with the intent of the regulation. This reduction is driven by small firms and high technology firms, rather than the large firms targeted by the SEC, which suggests that selective disclosure among large firms may have been much more limited than what was presumed by proponents of FD. In addition, we document that FD has decreased the average information quality of investors in small and high technology firms in the period prior to an earnings announcement while having no lasting effect on other firms. Taken together these two results suggest that, for small and high technology firms, FD succeeded in eliminating selective disclosure but also lowered the average quality of information available about these firms.

Journal

Journal of Corporate FinanceElsevier

Published: Jun 1, 2007

References

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