Increased Mandated Disclosure Frequency and Price Formation: Evidence from the 8-K Expansion Regulation

52 Pages Posted: 2 Apr 2018 Last revised: 3 Sep 2018

See all articles by Jeff L. McMullin

Jeff L. McMullin

Indiana University - Kelley School of Business - Department of Accounting

Brian P. Miller

Indiana University - Kelley School of Business - Department of Accounting

Brady J. Twedt

University of Oregon - Lundquist College of Business

Date Written: June 26, 2018

Abstract

Regulators claim that increased mandated disclosure frequency should lead to more efficient price formation. However, analytical models suggest that mandating disclosure may actually impede the price formation process, and prior empirical studies have been unable to document a relation between mandatory disclosure and improved price formation. We re-examine this relationship using a recent SEC regulation that increased the frequency of mandated event disclosures in form 8-K. We show that price formation improves after the mandate, where firms with the largest increases in mandatory disclosure experience the greatest improvements in price formation. Our evidence is consistent with the idea that mandating an increase in the frequency that material events must be disclosed is associated with improved price formation.

Keywords: Regulation, Mandatory Disclosure, 8-K Filings, Price Formation

JEL Classification: D82, G38, M41, L51

Suggested Citation

McMullin, Jeff L. and Miller, Brian P. and Twedt, Brady J., Increased Mandated Disclosure Frequency and Price Formation: Evidence from the 8-K Expansion Regulation (June 26, 2018). Review of Accounting Studies, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3151607

Jeff L. McMullin

Indiana University - Kelley School of Business - Department of Accounting ( email )

1309 E. 10th Street
Bloomington, IN 47405
United States

Brian P. Miller (Contact Author)

Indiana University - Kelley School of Business - Department of Accounting ( email )

1309 E. 10th Street
Bloomington, IN 47405
United States
812-855-2606 (Phone)

Brady J. Twedt

University of Oregon - Lundquist College of Business ( email )

Lundquist College of Business
1208 University of Oregon
Eugene, OR 97403
United States

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