Performance Volatility, Information Availability, and Disclosure Reforms

45 Pages Posted: 21 May 2013 Last revised: 28 Nov 2016

See all articles by Renhui Fu

Renhui Fu

Shanghai Jiao Tong University (SJTU) - Antai College of Economics and Management

Fang Gao

Donghua University

Yong H. Kim

University of Cincinnati

Buhui Qiu

University of Sydney Business School; Financial Research Network (FIRN)

Date Written: September 28, 2016

Abstract

Using the 2002 Sarbanes-Oxley reform as an exogenous disclosure shock, we find that high, relative to low, volatility firms opt for lower levels of information availability pre reform and experience increases in information availability, CEO turnover-to-performance sensitivity, myopic behavior, CEO compensation with a structure tilted towards more cash pay, and a reduction in firm value post the reform. Our findings suggest that mandating high levels of information availability across the board increases managerial evaluation risk and produces additional agency costs for firms with volatile performance.

Keywords: Performance Volatility, Information Availability, Disclosure Reforms

JEL Classification: M40, M41, G38

Suggested Citation

Fu, Renhui and Gao, Fang and Kim, Yong H. and Qiu, Buhui, Performance Volatility, Information Availability, and Disclosure Reforms (September 28, 2016). Journal of Banking and Finance 75: 35–52, 2017, Available at SSRN: https://ssrn.com/abstract=2267233

Renhui Fu (Contact Author)

Shanghai Jiao Tong University (SJTU) - Antai College of Economics and Management ( email )

1954 Huashan Road
Shanghai Jiao Tong University
Shanghai, Shanghai 200030
China
+862152301575 (Phone)

Fang Gao

Donghua University ( email )

Shanghai 200051
China

Yong H. Kim

University of Cincinnati ( email )

Lindner College of Business
410 Carl H. Lindner Hall, P.O. Box 210195
Cincinnati, OH 45221
United States
513-556-7084 (Phone)
513-556-0979 (Fax)

Buhui Qiu

University of Sydney Business School ( email )

Room 513, The Codrington Building
The University of Sydney
Sydney, NSW 2006
Australia
+61 2 9036 6435 (Phone)
+61 2 9351 6461 (Fax)

HOME PAGE: http://sydney.edu.au/business/staff/buhuiq

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

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