Local Policy Uncertainty and Firm Disclosure

51 Pages Posted: 17 Jul 2017 Last revised: 1 Nov 2021

See all articles by Audra L. Boone

Audra L. Boone

Texas Christian University - M.J. Neeley School of Business; European Corporate Governance Institute (ECGI)

Abby Kim

affiliation not provided to SSRN

Joshua T. White

Vanderbilt University - Finance

Date Written: December 20, 2020

Abstract

We explore how managers adjust voluntary disclosure in response to local policy uncertainty generated by gubernatorial elections. We show that the securities of firms headquartered in election states experience transitory deterioration in firm-level measures of uncertainty and information asymmetry in the months prior to the election. Managers respond to local policy uncertainty by providing more frequent and informative voluntary disclosures, but only when they do not reduce real activities. Cross-sectional tests indicate that voluntary disclosure increases more for firms with higher external demand for information from analysts and institutional investors, more investment, and lower disclosure costs.

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., Local Policy Uncertainty and Firm Disclosure (December 20, 2020). 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

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Abby Kim

affiliation not provided to SSRN

Joshua T. White (Contact Author)

Vanderbilt University - Finance ( email )

401 21st Avenue South
Nashville, TN 37203
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
815
Abstract Views
4,958
Rank
46,201
PlumX Metrics