Does Modern Information Technology Attenuate Managerial Information Hoarding? Evidence from EDGAR Implementation
44 Pages Posted: 22 Feb 2021 Last revised: 27 Sep 2021
Date Written: September 14, 2021
Abstract
Exploiting the staggered implementation of the EDGAR system from 1993 to 1996 as exogenous shocks to information dissemination technologies, we document that faster dissemination of corporate disclosures through the internet increases firms’ future stock price crash risk. These results are robust to alternative sample constructions, measures of crash risk, and fixed effects. Supplemental evidence suggests two channels: an increase in stock liquidity and an increase in investors’ reliance on public disclosure, both of which exacerbate managers’ incentives to withhold bad news. Overall, our findings suggest that modern information technology may have an unintended effect on managers’ bad news hoarding behavior.
Keywords: Modern Information Technology, EDGAR, Information Hoarding, Stock Price Crash Risk, Stock Liquidity
JEL Classification: G12, G14, M41, D83, O33
Suggested Citation: Suggested Citation