Persistent Costs of Disclosure Exemption Regulation
Name
Voelcker-gmv-SMMR-Management-2022-thesis.pdf
Description
Thesis PDF
Size
1.5 MB
Format
Adobe PDF
Checksum (MD5)
9f801f3b1f6a1639655044a83a7802f9
Author(s)
Voelcker, Gabriel
Advisor(s)
Verdi, Rodrigo
Date Issued
May 2022
Publisher
Massachusetts Institute of Technology
Abstract
This paper investigates the long-term costs of size-based disclosure exemption regulation. Prior literature documents that companies react to exemption thresholds by sacrificing resources to actively lower their size and avoid compliance of reporting requirements. Exploiting the Smaller Reporting Companies’ (SRCs) threshold update in 2018, I examine whether the investment-sacrificing behavior of companies is timely reversed once the SRC threshold is lifted. I hypothesize and find evidence that size manipulation is not reversed until at least two years after the SRC threshold update, imposing persistent costs on smaller companies that have been previously overlooked by the literature. As such, the effects of a size-based threshold may not be trivially undone, adding another layer of complexity to size-based regulatory interventions.
MIT Department
Sloan School of Management
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In Copyright - Educational Use Permitted
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