CORPORATE DISCLOSURES AFTER THE EPTEMBER 11 TERRORIST ATTACKS

We examine the actions that insurance firms take immediately after the September 11 attacks to reduce information asymmetries. We find that voluntary disclosure behavior is positively related to the magnitude of the September 11-related loss. Conditioning for the loss, disclosure behavior also systematically varies with firm leverage. However, these disclosures do not seem to impact the bid-ask spreads of the disclosing firms, perhaps because of the higher levels of uncertainty related to the extreme nature of the attacks. The study sheds light on the reactions of management during crisis events and the effect (or lack thereof) of such actions on firms’ information environment.