An important determinant of belief polarization is the different interpretations of the same information. We examine whether discourse uncertainty in corporate disclosures, an important driver of differential interpretations, leads to polarization in financial markets. Using a novel measure of...

Effective as of November 23, 2016, SEC Regulation (“Reg”) AB II requires issuers of certain types of asset-backed securities (“ABS”) to disclose information about the credit-risk attributes of each asset in the underlying pool. The prior Reg AB required issuers to disclose only...

Does textual complexity affect attention and market outcomes? I conduct a global field experiment with Seeking Alpha that randomly assigns to investors different titles for the same news article. Investors are less likely to open the articles when titles are more complex---scored quantitatively...

Fair value refers to current values as the backbones of accounting measurements. Current value follows the efficient financial market (EFM) hypothesis - which abstracts away from economic realization - as guidance for the financial market investment process through ignorance and hazard. This...

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...

We exploit cross-country variation in banks’ confidential reporting requirements under COREP, the common European supervisory risk reporting framework, as an indicator for banking supervisors’ preference for private information. Our results suggest that a stronger preference for confidential...

This study develops and evaluates a model that generates synthetic credit ratings using accounting and market based information. The model performs very well in explaining agency ratings, suggesting that fitted values for unrated companies are likely to be reasonably precise. In addition, the...

The overall market for derivative securities is often estimated as more than ten times the World's GDP and many decry the complexity of derivatives as a main contributor to the subprime financial crisis. In this paper, we investigate whether and why complexity is used as a proxy for risk when...

We study how statutory-law changes relate to disclosure, pricing, and liquidity in the used-car market. Federal odometer laws mandated disclosure of mileage on car titles upon ownership transfer and thereby enhanced enforcement of odometer-fraud prohibitions. Exploiting time variations in state...

In addition to quantitative financial information, qualitative verbal information has also been continuously changing. In this study, we clarify the information contents of changes in qualitative verbal information. As an analyzable sample, we focus on textual opinion in analyst reports. The...