EDGAR Implementation, Unionization, and Strategic Disclosure

55 Pages Posted: 14 Jul 2022 Last revised: 5 Apr 2023

See all articles by Daniel Aobdia

Daniel Aobdia

Pennsylvania State University - Smeal College of Business

Lin Cheng

The University of Arizona - Eller College of Management

Qin Tan

City University of Hong Kong (CityU)

Xuan Wu

Harbin Institute of Technology, Shenzhen

Date Written: April 3, 2023

Abstract

Answering the call by Blankespoor et al. (2020) to study the effect of disclosure processing frictions on other stakeholders and decision contexts, this study examines how firms facing strong organized labor strategically respond to the implementation of the EDGAR system, which substantially reduced labor unions’ information processing costs and information asymmetry between union leaders and regular workers. Consistent with firms’ incentives to maintain an information advantage and bargaining position with labor unions, we find that firms reduce the disaggregation in financial statements, the likelihood and frequency of voluntary management forecasts, and the proportion of forecasts conveying good news. Our study is the first to investigate the implications of information processing costs to labor markets and to examine firms’ strategic disclosure responses to EDGAR implementation caused by concerns from other markets. It improves our understanding on the dynamic effects and real outcomes of shocks to disclosure processing costs beyond equity markets.

Keywords: information processing cost, EDGAR implementation, labor union, proprietary cost of disclosures, strategic disclosures

Suggested Citation

Aobdia, Daniel and Cheng, Lin and Tan, Qin and Wu, Xuan, EDGAR Implementation, Unionization, and Strategic Disclosure (April 3, 2023). Available at SSRN: https://ssrn.com/abstract=4155581 or http://dx.doi.org/10.2139/ssrn.4155581

Daniel Aobdia (Contact Author)

Pennsylvania State University - Smeal College of Business ( email )

University Park, PA 16802
United States

Lin Cheng

The University of Arizona - Eller College of Management ( email )

McClelland Hall, Room 301Q
1130 E. Helen Street
Tucson, AZ 85721
United States

Qin Tan

City University of Hong Kong (CityU) ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

Xuan Wu

Harbin Institute of Technology, Shenzhen ( email )

University Town
Nanshan District
Shenzhen, Guangdong 518055
China

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