Abstract

http://ssrn.com/abstract=2129805
 
 

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Competition and Voluntary Disclosure: Evidence from Deregulation in the Banking Industry


Jeffrey J. Burks


University of Notre Dame

Christine Cuny


New York University (NYU) - Leonard N. Stern School of Business

Joseph Gerakos


University of Chicago - Booth School of Business

Joao Granja


Massachusetts Institute of Technology (MIT) - Sloan School of Management

December 11, 2015

Chicago Booth Research Paper No. 12-29

Abstract:     
We use the relaxation of interstate branching restrictions under the Interstate Banking and Branching Efficiency Act (IBBEA) to examine how increases in competition affect incumbents' voluntary disclosure choices. States implemented the IBBEA over several years and to varying degrees, allowing us to identify the effect of increased competition on the voluntary disclosure decisions of both public and private banks. We find that increases in competition are associated with increases in the level of voluntary disclosure. Specifically, we find an overall increase in press releases. Consistent with heightened incentives to communicate with investors, customers, and regulators, we document an increase in press releases containing forward-looking, product- related, and capital structure-related disclosures. We find that the tone of press releases becomes more negative after entry barriers are lowered, which supports the prediction that incumbents increase the disclosure of bad news to deter entry. The negative tone effect is stronger for private banks that likely use press releases to communicate with competitors rather than investors.

Number of Pages in PDF File: 41

Keywords: Voluntary disclosure, Competition, Banking

JEL Classification: M41, G21, D40


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Date posted: August 16, 2012 ; Last revised: December 21, 2015

Suggested Citation

Burks, Jeffrey J. and Cuny, Christine and Gerakos, Joseph and Granja, Joao, Competition and Voluntary Disclosure: Evidence from Deregulation in the Banking Industry (December 11, 2015). Chicago Booth Research Paper No. 12-29. Available at SSRN: http://ssrn.com/abstract=2129805 or http://dx.doi.org/10.2139/ssrn.2129805

Contact Information

Jeffrey J. Burks
University of Notre Dame ( email )
Mendoza College of Business
Notre Dame, IN 46556-5646
United States
Christine Cuny (Contact Author)
New York University (NYU) - Leonard N. Stern School of Business ( email )
44 West 4th Street
Ste. 10-91
New York, NY NY 10012
United States
212-998-0423 (Phone)
Joseph J. Gerakos
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Ave.
Chicago, IL 60637
United States
773-834-6882 (Phone)
Joao Granja
Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )
77 Massachusetts Ave.
E62-416
Cambridge, MA 02142
United States
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