Abstract

http://ssrn.com/abstract=307821
 
 

References (34)



 
 

Citations (100)



 


 



Economic Consequences of SEC Disclosure Regulation: Evidence from the OTC Bulletin Board


Brian J. Bushee


University of Pennsylvania - The Wharton School

Christian Leuz


University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI); Center for Financial Studies (CFS); University of Pennsylvania - Wharton Financial Institutions Center; CESifo Research Network

April 2004

AFA 2004 San Diego Meetings

Abstract:     
This paper examines the economic consequences of a regulatory change mandating OTCBB firms to comply with reporting requirements under the 1934 Securities Exchange Act. This change substantially increases mandated disclosures for firms previously not filing with the SEC. We document that the imposition of disclosure requirements results in significant costs for smaller firms, forcing them off the OTCBB. SEC regulation also has significant benefits. Firms previously filing with the SEC experience positive stock returns and permanent increases in liquidity, suggesting positive externalities from disclosure regulation. Newly compliant firms exhibit significant increases in liquidity consistent with improved disclosure reducing information asymmetry.

Note: Previously titled "Economic Consequences of SEC Disclosure Regulation: Evidence from the OTC Bulletin Board"

Number of Pages in PDF File: 43

Keywords: Mandatory disclosure, enforcement, externalities, over-the-counter market, liquidity, listing choices, eligibility rule

JEL Classification: G18, G38, K22, G39, M41, M45, M44, G14

working papers series


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Date posted: April 19, 2004  

Suggested Citation

Bushee, Brian J. and Leuz, Christian, Economic Consequences of SEC Disclosure Regulation: Evidence from the OTC Bulletin Board (April 2004). AFA 2004 San Diego Meetings. Available at SSRN: http://ssrn.com/abstract=307821 or http://dx.doi.org/10.2139/ssrn.307821

Contact Information

Brian J. Bushee
University of Pennsylvania - The Wharton School ( email )
3641 Locust Walk
Philadelphia, PA 19104-6365
United States
215-898-4872 (Phone)
215-573-2054 (Fax)

Christian Leuz (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-834-1996 (Phone)
HOME PAGE: http://chicagobooth.edu/fac/christian.leuz
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
HOME PAGE: http://www.nber.org
European Corporate Governance Institute (ECGI)
Brussels
Belgium
HOME PAGE: http://www.ecgi.org
Center for Financial Studies (CFS) ( email )
Grüneburgplatz 1
Frankfurt am Main, 60323
Germany
University of Pennsylvania - Wharton Financial Institutions Center
3641 Locust Walk
Philadelphia, PA 19104-6218
United States
CESifo Research Network
Poschinger Str. 5
Munich, DE-81679
Germany
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