Leveling the Playing Field: Disclosure Regulation and Local Informational Advantage

50 Pages Posted: 13 Apr 2011 Last revised: 28 Apr 2016

See all articles by Gennaro (帅纳) Bernile

Gennaro (帅纳) Bernile

University of Miami - Department of Finance

Alok Kumar

University of Miami - Miami Herbert Business School

Johan Sulaeman

National University of Singapore (NUS) - Sustainable & Green Finance Institute (SGFIN); European Corporate Governance Institute (ECGI); Asian Bureau of Finance and Economic Research (ABFER)

Date Written: March 16, 2015

Abstract

This study examines how changes in firms' information environment affect local agents. We show that local bias and informational advantage of institutional investors and equity analysts located around corporate headquarters decline sharply following the adoption of Regulation Fair Disclosure and Sarbanes-Oxley Act. The decline in local bias is more salient among firms whose information environment is more opaque before the new rules. At the aggregate market level, the degree of informed trading attributed to local investors also declines. Overall, the evidence is consistent with disclosure regulation affecting the informational advantage that market participants enjoy due to their proximity to firms.

Keywords: Disclosure Regulation; Reg FD; Sarbanes-Oxley; Local Bias; Local Performance; Institutional Investors; Equity Analysts

Suggested Citation

Bernile, Gennaro (帅纳) and Kumar, Alok and Sulaeman, Johan, Leveling the Playing Field: Disclosure Regulation and Local Informational Advantage (March 16, 2015). Available at SSRN: https://ssrn.com/abstract=1808123 or http://dx.doi.org/10.2139/ssrn.1808123

Gennaro (帅纳) Bernile

University of Miami - Department of Finance ( email )

P.O. Box 248094
Coral Gables, FL 33124-6552
United States

Alok Kumar (Contact Author)

University of Miami - Miami Herbert Business School ( email )

517B Jenkins Building
Department of Finance
Coral Gables, FL 33124-6552
United States
305-284-1882 (Phone)

HOME PAGE: http://sites.google.com/view/alokmiami/home

Johan Sulaeman

National University of Singapore (NUS) - Sustainable & Green Finance Institute (SGFIN) ( email )

Singapore

HOME PAGE: http://sites.google.com/site/johansulaeman/

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://https://ecgi.global/users/johan-sulaeman

Asian Bureau of Finance and Economic Research (ABFER) ( email )

BIZ 2 Storey 4, 04-05
1 Business Link
Singapore, 117592
Singapore

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