Competition and Voluntary Disclosure: Evidence from Deregulation in the Banking Industry
Jeffrey J. Burks
University of Notre Dame
New York University (NYU) - Leonard N. Stern School of Business
University of Chicago - Booth School of Business
MIT - Sloan School of Management
October 24, 2013
Chicago Booth Research Paper No. 12-29
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 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 and, in particular, an increase in those containing forward-looking, earnings-related, and capital structure-related disclosures. Consistent with incumbents increasing the disclosure of bad news to deter new entry, the tone of press releases becomes less positive and more negative after entry barriers are lowered.
Number of Pages in PDF File: 41working papers series
Date posted: August 16, 2012 ; Last revised: October 26, 2013
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