Political Uncertainty and Firm Disclosure

68 Pages Posted: 17 Jul 2017 Last revised: 12 Feb 2019

See all articles by Audra L. Boone

Audra L. Boone

Texas Christian University - M.J. Neeley School of Business

Abby Kim

Securities and Exchange Commission

Joshua T. White

Vanderbilt University - Finance

Date Written: July 31, 2018


We find that heightened policy uncertainty from gubernatorial elections negatively affects the market quality of local firms. Election firms respond by providing more frequent and informative voluntary disclosures to investors and analysts. While prior work shows that governor elections dampen firm investment and capital raising, we show that that the increase in voluntary disclosure stems from firms without a pause in mandatory SEC disclosures related to such activities. Cross-sectional tests show that voluntary disclosure increases are greater for firms with more investment, higher external demand for information, and lower proprietary disclosure costs. Our paper demonstrates a setting where managers respond to the effects of transitory uncertainty by increasing transparency.

Keywords: Political Uncertainty, Information Environment, Information Asymmetry, Voluntary Disclosure, Mandatory Disclosure

JEL Classification: D82, G14, G38, M41

Suggested Citation

Boone, Audra and Kim, Abby and White, Joshua T., Political Uncertainty and Firm Disclosure (July 31, 2018). Vanderbilt Owen Graduate School of Management Research Paper. Available at SSRN: https://ssrn.com/abstract=3003157 or http://dx.doi.org/10.2139/ssrn.3003157

Audra Boone

Texas Christian University - M.J. Neeley School of Business ( email )

Fort Worth, TX 76129
United States

Abby Kim

Securities and Exchange Commission ( email )

100 F Street NE
Washington, DC 20549
United States

Joshua T. White (Contact Author)

Vanderbilt University - Finance ( email )

401 21st Avenue South
Nashville, TN 37203
United States

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