Economic Policy Uncertainty, Information Asymmetry, and Firm Disclosure

46 Pages Posted: 22 Sep 2016 Last revised: 20 Feb 2018

Venky Nagar

University of Michigan, Stephen M. Ross School of Business

Jordan Schoenfeld

University of Utah

Laura Wellman

University of Utah - David Eccles School of Business

Date Written: February 19, 2018

Abstract

Accounting research has long focused on whether idiosyncratic (or firm-specific) uncertainty affects firms' information environments. We extend this research by showing that systematic economic policy uncertainty (EPU) increases information asymmetry, decreases investor response to earnings disclosures, and increases managers' provision of guidance. Our findings are consistent across a variety of market-level and firm-level analyses. We conclude that systematic EPU is an important component of firms' information environments and managers' disclosure decisions

Keywords: Corporate Disclosure; Economic Policy Uncertainty; Information Asymmetry

JEL Classification: D80, E61, E65, G12, G14, G18, L50

Suggested Citation

Nagar, Venky and Schoenfeld, Jordan and Wellman, Laura, Economic Policy Uncertainty, Information Asymmetry, and Firm Disclosure (February 19, 2018). Ross School of Business Paper No. 1333. Available at SSRN: https://ssrn.com/abstract=2841442 or http://dx.doi.org/10.2139/ssrn.2841442

Venky Nagar

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States
734-647-3292 (Phone)
734-764-3146 (Fax)

Jordan Schoenfeld (Contact Author)

University of Utah ( email )

1645 E. Campus Center
Salt Lake City, UT 84112
United States

Laura Wellman

University of Utah - David Eccles School of Business ( email )

1645 Campus Center Drive
Salt Lake City, UT 84112
United States

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