This study tests whether voluntary disclosure affects stock liquidity. I argue that index funds fit the profile of nonstrategic traders who, according to theory, are unambiguously more likely than managers and strategic investors to prefer high stock liquidity and thus high disclosure. This...

In addition to disclosure regulation, the Securities and Exchange Commission (SEC) periodically intervenes in the market making process to facilitate fair, orderly, and efficient capital markets. For example, responding to calls for increased market maker competition on the Nasdaq in the early...

This paper exploits a unique natural experiment in which a regulator limited voluntary disclosure of oil and gas firms. We examine the implications of this disclosure rule on unexplained trading volume and market liquidity. Relying on the theoretical framework of Kim and Verrecchia (1994), the...

The SEC's Disclosure Effectiveness Initiative (December 2013) highlights a difference between accounting regulators and academics in their perceptions of Item 1A risk factor disclosure effectiveness. Because most academic evidence relies on pre-financial crisis data, we compare changes in risk...

This study examines how algorithmic trading (AT) affects forward-looking disclosures in Management Discussion and Analysis (MD&A) of annual reports. We predict and find evidence that AT relates negatively to modifications in year-over-year forward-looking MD&A disclosures. This evidence is...

Why does the market react to companies’ announcements of strategic alternatives with a +5.2 percent return, only to experience a future return of -9.7 percent? We find evidence consistent with a mispricing explanation in that: (i) investors and analysts are overly optimistic about a potential...

This paper reviews the literature examining how costs of monitoring for, acquiring, and analyzing firm disclosures – collectively, “disclosure processing costs” – affect investor information choices, trades, and market outcomes. The existence of disclosure processing costs means that...

This paper examines insider trading around first-time debt covenant violation disclosures in SEC filings, and is interesting from a research and regulatory standpoint for three reasons – delay and infrequency of a first-time disclosure, lack of attention to covenant disclosures by regulators,...

This study investigates the effect of a security regulation that occurs concomitantly with International Financial Reporting Standards (IFRS) adoption on the information content of earnings announcements in Italy. To identify the effect of this regulation, we use a treatment (i.e., Italy) and a...

This article investigates how the stock market reacts to the disclosure of internal control deficiencies under the Japanese Sarbanes-Oxley Act of 2006. Given the Japanese official agencies' attempts to minimize negative shocks, we find no stock market reactions on the whole to the disclosure of...