Investor Protection Under Unregulated Financial Reporting

74 Pages Posted: 21 Apr 2003

See all articles by Jan Barton

Jan Barton

Emory University

Gregory B. Waymire

Emory University - Department of Accounting

Date Written: March 3, 2003

Abstract

We examine whether availability of higher quality financial information lessens investor losses during a period seen as a stock market crash. We focus on October 1929, which partly motivated sweeping financial reporting regulations in the 1930s. Using a sample of 540 common stocks traded on the New York Stock Exchange during October 1929, we find that the quality of firms' financial reporting increases with managers' incentives to supply higher quality financial information demanded by investors. Moreover, firms with higher quality financial reporting before October 1929 experienced smaller stock price declines during the market crash.

Keywords: Investor protection, Voluntary disclosure, Financial reporting quality, Financial reporting regulation, Stock market crashes

JEL Classification: D8, G1, K2, M4, N2

Suggested Citation

Barton, Jan and Waymire, Gregory B., Investor Protection Under Unregulated Financial Reporting (March 3, 2003). Available at SSRN: https://ssrn.com/abstract=386140 or http://dx.doi.org/10.2139/ssrn.386140

Jan Barton (Contact Author)

Emory University ( email )

1300 Clifton Road
Atlanta, GA 30322-2722
United States
404-727-6398 (Phone)
404-727-6313 (Fax)

Gregory B. Waymire

Emory University - Department of Accounting ( email )

Goizueta Business School
1300 Clifton Road
Atlanta, GA 30322
United States
404-727-6589 (Phone)
404-727-6313 (Fax)

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