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

Journal of Accounting Research, Forthcoming

57 Pages Posted: 7 Jul 2020 Last revised: 4 Jun 2023

See all articles by Itay Goldstein

Itay Goldstein

University of Pennsylvania - The Wharton School - Finance Department ; National Bureau of Economic Research (NBER)

Shijie Yang

Southern University of Science and Technology

Luo Zuo

National University of Singapore; Cornell University

Multiple version iconThere are 2 versions of this paper

Date Written: June 3, 2023

Abstract

Using the implementation of the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system from 1993 to 1996 as a shock to information dissemination technologies, we examine how a significant reduction in disclosure processing costs affects the real economy. We find that the EDGAR implementation leads to an increase in corporate investment and that this effect is concentrated in value firms. We provide evidence that improved equity financing and enhanced managerial incentives are likely the underlying mechanisms. Specifically, the EDGAR implementation leads to an increase in a firm’s stock liquidity, a decrease in the cost of equity capital, and an increase in the level of equity financing. Consistent with the monitoring effect of broad information dissemination, the EDGAR implementation leads to an increase in a firm’s operating performance. Our findings suggest that it is important to consider information dissemination beyond information production when examining the real effects of corporate disclosures.

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

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 (June 3, 2023). Journal of Accounting Research, Forthcoming, 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)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Shijie Yang

Southern University of Science and Technology ( email )

1088 Xueyuan Avenue
Nanshan District
Shenzhen, Guangdong 518055
China

Luo Zuo (Contact Author)

National University of Singapore ( email )

Cornell University ( email )

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