Voluntary Disclosure by Shareholders

44 Pages Posted: 10 Mar 2018  

Ryan McDonough

Rutgers Business School - Newark & New Brunswick

Jordan Schoenfeld

Georgetown University, McDonough School of Business

Date Written: March 1, 2018


Disclosure research has long centered on the economic consequences of disclosures released by firms to shareholders. In this study, we extend this literature by showing that large activist shareholders release disclosures that are associated with significant stock price movements and decreased investor information asymmetry. These disclosures are also leading indicators of key activist-campaign outcomes, including proxy contests, directorships, and proxy advisor recommendations. These findings suggest that activists release disclosures for the purpose of facilitating change at the target firm and informing other investors. We also find that managers respond to activist disclosures through increased disclosure of their own. Our findings are consistent across a variety of specifications and are validated by several placebo tests. We conclude that activist disclosures are an important but understudied component of firms' information environments and managers' disclosure decisions.

Keywords: Corporate Governance, Information Asymmetry, Shareholder Activism, Voluntary Disclosure

JEL Classification: D21, G30, G32, G34, K22, L22

Suggested Citation

McDonough, Ryan and Schoenfeld, Jordan, Voluntary Disclosure by Shareholders (March 1, 2018). Georgetown McDonough School of Business Research Paper No. 3137216. Available at SSRN: https://ssrn.com/abstract=3137216 or http://dx.doi.org/10.2139/ssrn.3137216

Ryan McDonough

Rutgers Business School - Newark & New Brunswick ( email )

100 Rockafeller Road
Piscataway, NJ 08854-8054
United States

Jordan Schoenfeld (Contact Author)

Georgetown University, McDonough School of Business ( email )

3700 O Street, NW
Washington, DC 20057
United States

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