We provide a theory of mandatory accounting conservatism as a means to avoid speculative bubbles and overvaluation. In a simple exchange economy where agents trade due to differences in opinion, we show that conservatism leads to a lower expected stock price than a full disclosure regime. Thus...

This study examines the profitability of insider trading on Euronext Amsterdam. To improve market transparency, disclosure of insider trading has been required in the Netherlands since April 1999. Both a short-term event study and a 6-month buy-and-hold strategy revealed that insiders as well as...

We analyze a sample of 330 firms making unaudited disclosures required by Section 302 and 383 firms making audited disclosures required by Section 404 of the Sarbanes-Oxley Act. We find that Section 302 disclosures are associated with negative announcement abnormal returns of -1.8 percent, and...

This paper examines the economic consequences of a recent regulatory change mandating OTC Bulletin Board firms to comply with the reporting requirements under the 1934 Securities Exchange Act. This change substantially increases the required disclosures for firms that previously did not file...

This paper surveys the theoretical and empirical literature on the economic consequences of financial reporting and disclosure regulation. We integrate theoretical and empirical studies from accounting, economics, finance and law in order to contribute to the cross-fertilization of these fields....

In our model, informed players decide whether or not to disclose, and observers allocate attention among disclosed signals, and toward reasoning through the implications of a failure to disclose. In equilibrium disclosure is incomplete, and observers are unrealistically optimistic. Nevertheless,...

We contribute to the literature on Regulation Fair Disclosure (FD) in three ways. First, we provide evidence on whether FD has achieved its intended effect of leveling the information playing field by examining whether differences across investors' information quality prior to earnings...

We examine a comprehensive sample of going-dark deregistrations where companies cease SEC reporting, but continue to trade publicly. We document a spike in going dark that is largely attributable to the Sarbanes-Oxley Act. Firms experience large negative abnormal returns when going dark. We find...

This paper examines a unique stock market monitoring program used by the Australian Stock Exchange (ASX). When the ASX observes unusual share price or trading volume changes of a listed company, it sends a letter demanding an explanation. Companies need to respond publicly to several stylized...

In this paper, we analyze how financial analysts generate information, make decisions about firm coverage and try to maintain their forecasting accuracy after the passage of Regulation Fair Disclosure (Reg. FD). Using the model developed by Barron, Kim, Lim and Stevens (1998), we find that...