When You Talk, I Remain Silent: Spillover Effects of Peers’ Mandatory Disclosures on Firms’ Voluntary Disclosures
73 Pages Posted: 10 Aug 2016 Last revised: 24 Jun 2020
Date Written: April 1, 2019
We predict and find that regulated firms’ mandatory disclosures crowd out unregulated firms’ voluntary disclosures. Consistent with information spillovers from regulated to unregulated firms, we document that unregulated firms reduce their own disclosures in the presence of regulated firms’ disclosures. We further find that unregulated firms reduce their disclosures more the greater the strength of the regulatory information spillovers. Our findings suggest that a substitutive relationship between regulated and unregulated firms’ disclosures attenuates the effect of disclosure regulation on the market-wide information environment.
Keywords: Mandatory disclosure, voluntary disclosure, information spillovers, crowding-out
JEL Classification: M41, M48, G38
Suggested Citation: Suggested Citation