The Real Effects of Modern Information Technologies: Evidence from the EDGAR Implementation

61 Pages Posted: 7 Jul 2020 Last revised: 19 Oct 2021

See all articles by Itay Goldstein

Itay Goldstein

University of Pennsylvania - The Wharton School - Finance Department

Shijie Yang

The Chinese University of Hong Kong, Shenzhen

Luo Zuo

Cornell University - Samuel Curtis Johnson Graduate School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: October 18, 2021

Abstract

Using the implementation of the EDGAR system from 1993 to 1996 as a shock to information dissemination technologies, we examine the potential benefits and costs of modern information technologies on the real economy. On the one hand, we document that broader information dissemination leads to a decrease in the cost of capital and an increase in the level of equity financing and corporate investment. On the other hand, we provide evidence that greater dissemination of corporate disclosures crowds out investors’ private information acquisition and reduces managerial learning from stock prices. Our findings suggest that it is important to consider this tradeoff between improved equity financing and reduced managerial learning when evaluating the economic effects of modern information technologies. Our evidence suggests that the former effect dominates in value firms while the latter effect dominates in high-growth firms.

Keywords: Corporate Investment, Information Technologies, EDGAR, Equity Financing, Managerial Learning.

JEL Classification: G12, G14, G31, M41.

Suggested Citation

Goldstein, Itay and Yang, Shijie and Zuo, Luo, The Real Effects of Modern Information Technologies: Evidence from the EDGAR Implementation (October 18, 2021). Available at SSRN: https://ssrn.com/abstract=3644613 or http://dx.doi.org/10.2139/ssrn.3644613

Itay Goldstein

University of Pennsylvania - The Wharton School - Finance Department ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104
United States
215-746-0499 (Phone)

Shijie Yang

The Chinese University of Hong Kong, Shenzhen ( email )

Zhiren 606
2001 Longxiang Road, Longgang District
Shenzhen, Guangdong 518172
China

Luo Zuo (Contact Author)

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

349 Sage Hall
Ithaca, NY 14853
United States
607-255-4002 (Phone)

HOME PAGE: http://www.johnson.cornell.edu/faculty-research/faculty/lz352/

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