Working Paper: NBER ID: w29747
Authors: Oliver Binz; John Graham
Abstract: We examine whether the Securities Exchange Act of 1934 increased the information content of corporate earnings disclosures. Prior research questions whether the Act improved disclosure quality but generally relies on long-window tests and yields mixed results. We focus on whether the Act increased earnings informativeness, improving upon prior designs by focusing on short earnings announcement windows and employing a difference-in-differences design to control for potential contemporaneous structural changes. We document an increase in earnings informativeness following the Act, which is larger for treatment firms (which withheld disclosure before the Act) than for control firms. The increase in informativeness is more pronounced for firms that are subject to stronger enforcement.
Keywords: No keywords provided
JEL Codes: B26; G14; G18; K22; M41; M48
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increase in earnings informativeness (G14) | increase in value of accounting information to investors (G14) |
| increase in earnings response coefficients (ERCs) for treatment firms (C22) | increase in value of accounting information to investors (G14) |
| Securities Exchange Act of 1934 (G18) | increase in earnings informativeness (G14) |
| Securities Exchange Act of 1934 (G18) | increase in value of accounting information to investors (G14) |
| Securities Exchange Act of 1934 (G18) | increase in earnings response coefficients (ERCs) for treatment firms (C22) |