Download this Paper Open PDF in Browser

Leveling the Playing Field: Disclosure Regulation and Local Informational Advantage

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

Gennaro Bernile

University of Miami - School of Business Administration

Alok Kumar

University of Miami - School of Business Administration

Johan Sulaeman

National University of Singapore (NUS) - Department of Finance

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 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 Bernile

University of Miami - School of Business Administration ( email )

5250 University Dr
Coral Gables, FL 33146
United States

Alok Kumar (Contact Author)

University of Miami - School of Business Administration ( email )

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

HOME PAGE: http://moya.bus.miami.edu/~akumar

Johan Sulaeman

National University of Singapore (NUS) - Department of Finance ( email )

Mochtar Riady Building
15 Kent Ridge Drive
Singapore, 119245
Singapore

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

Paper statistics

Downloads
300
Rank
76,888
Abstract Views
2,063