Policy Uncertainty and Textual Disclosure

56 Pages Posted: 28 Sep 2020 Last revised: 29 Apr 2021

See all articles by Liangliang Jiang

Liangliang Jiang

Hong Kong Polytechnic University

Jeffrey Pittman

Memorial University ; Virginia Tech

Walid Saffar

Hong Kong Polytechnic University - School of Accounting and Finance

Multiple version iconThere are 2 versions of this paper

Date Written: September 16, 2020


We analyze the importance of policy uncertainty to textual disclosure in the U.S. over the 1996- 2015 period. Consistent with the strategic-information-revelation view, we find that policy uncertainty increases textual disclosure quantity, as evident in disclosure length, but lowers textual readability and increases the tone of uncertainty and negativity. We also document that the negative impact on readability subsides when firms are subject to tough external monitoring. Finally, we provide evidence implying that investors perceive such disclosure to be valuable, as evident in cheaper equity financing costs under economic policy uncertainty.

Keywords: textual disclosure; policy uncertainty

JEL Classification: D72; G14; G18; G34

Suggested Citation

Jiang, Liangliang and Pittman, Jeffrey A. and Saffar, Walid, Policy Uncertainty and Textual Disclosure (September 16, 2020). Available at SSRN: https://ssrn.com/abstract=3693639 or http://dx.doi.org/10.2139/ssrn.3693639

Liangliang Jiang (Contact Author)

Hong Kong Polytechnic University ( email )

11 Yuk Choi Rd
Hung Hom
Hong Kong

Jeffrey A. Pittman

Memorial University ( email )

St. John's, Newfoundland A1B 3X5
709-737-3100 (Phone)
709-737-7680 (Fax)

Virginia Tech ( email )

United States

Walid Saffar

Hong Kong Polytechnic University - School of Accounting and Finance ( email )

Li Ka Shing Tower
Hong Hum
Hong Kong

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