Voluntary Disclosure and Information Asymmetry: Evidence from the 2005 Securities Offering Reform
Name
SSRN-id1846123.pdf
Size
384.3 KB
Format
Adobe PDF
Checksum (MD5)
026bfd53d7ef0e1978218fd2ea349c6a
Author(s)
SHROFF, NEMIT
SUN, AMY X.
WHITE, HAL D.
ZHANG, WEINING
Shroff, Nemit
Date Issued
December 2013
Journal
Journal of Accounting Research
Publisher
Wiley Blackwell
Citation
SHROFF, NEMIT, AMY X. SUN, HAL D. WHITE, and WEINING ZHANG. “Voluntary Disclosure and Information Asymmetry: Evidence from the 2005 Securities Offering Reform.” Journal of Accounting Research 51, no. 5 (December 2013): 1299–1345.
Version
Author's final manuscript
Abstract
In 2005, the Securities and Exchange Commission enacted the Securities Offering Reform (Reform), which relaxes “gun-jumping” restrictions, thereby allowing firms to more freely disclose information before equity offerings. We examine the effect of the Reform on voluntary disclosure behavior before equity offerings and the associated economic consequences. We find that firms provide significantly more preoffering disclosures after the Reform. Further, we find that these preoffering disclosures are associated with a decrease in information asymmetry and a reduction in the cost of raising equity capital. Our findings not only inform the debate on the market effect of the Reform, but also speak to the literature on the relation between voluntary disclosure and information asymmetry by examining the effect of quasi-exogenous changes in voluntary disclosure on information asymmetry, and thus a firm's cost of capital.
MIT Department
Sloan School of Management
Terms of Use
Creative Commons Attribution-Noncommercial-Share Alike
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.1111/1475-679x.12022
