Measuring Disclosure Using 8-K Filings
76 Pages Posted: 4 Apr 2019 Last revised: 18 May 2020
Date Written: May 13, 2020
We construct four voluntary disclosure and two mandatory disclosure measures for 260,880 firm-quarters from 2005 through 2016 using 8K data. The first voluntary disclosure measure is the count of 8Ks, a proxy used in prior studies. The second and third voluntary disclosure measures are the count and word count of the 8K items that are classified as voluntary (Items 2.02, 7.01, and 8.01) and the associated exhibits. The final voluntary disclosure measure is the count of the voluntary 8K items and exhibits that include management guidance, conference calls, non-GAAP measures, or investor day disclosures. We document basic properties of the voluntary disclosure measures, including their cross-sectional and time-series correlations and persistence, and associations with firm-level characteristics frequently examined in the disclosure literature. We show that, although the four measures are highly correlated, each of them captures unique aspects of firms’ disclosure activities. Based on how the measures are constructed and supported by our empirical findings, we contend that the word-count-8K measure provides a superior proxy for firm-level voluntary disclosure. Our univariate and multivariate analyses highlight that using even highly correlated measures can lead to differing conclusions. Further, associations between the voluntary disclosure measures and various firm attributes suggest future avenues for research in corporate disclosure propensities. Finally, we provide preliminary descriptive evidence of the specific information contained within the three voluntary 8K items.
Keywords: voluntary disclosure; mandatory disclosure; 8-K filings
JEL Classification: M41; D83
Suggested Citation: Suggested Citation