The Information Content of Corporate Earnings: Evidence from the Securities Exchange Act of 1934

Forthcoming in Journal of Accounting Research

54 Pages Posted: 25 Jun 2020 Last revised: 11 Mar 2022

See all articles by Oliver Binz

Oliver Binz

INSEAD

John R. Graham

Duke University; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: July 21, 2021

Abstract

We examine whether the Securities Exchange Act of 1934 increased the information content of corporate earnings disclosures. Prior research questions whether the Act improved disclosure quality but generally relies on long-window tests and yields mixed results. We focus on whether the Act increased earnings informativeness, improving upon prior designs by focusing on short earnings announcement windows and employing a difference-in-differences design to control for potential contemporaneous structural changes. We document an increase in earnings informativeness following the Act, which is larger for treatment firms (which withheld disclosure before the Act) than for control firms. The increase in informativeness is more pronounced for firms that are subject to stronger enforcement.

Keywords: Mandatory disclosure, Earnings announcements, Information content

JEL Classification: G14, G18, M40, M41, M48

Suggested Citation

Binz, Oliver and Graham, John Robert, The Information Content of Corporate Earnings: Evidence from the Securities Exchange Act of 1934 (July 21, 2021). Forthcoming in Journal of Accounting Research, Available at SSRN: https://ssrn.com/abstract=3615644 or http://dx.doi.org/10.2139/ssrn.3615644

Oliver Binz (Contact Author)

INSEAD ( email )

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John Robert Graham

Duke University ( email )

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National Bureau of Economic Research (NBER)

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