Re-Examining the Effects of Regulation Fair Disclosure Using Foreign Listed Firms to Control for Concurrent Shocks

Abstract

We re-examine prior studies' findings concerning the effects of Regulation Fair Disclosure (Reg FD) on properties of US firms' information environments. Our study's innovation is the identification of a sample of industry- and size-matched foreign listed firms (ADRs) explicitly exempt from the provisions of Reg FD. We use the ADR sample to control for events occurring at the same time as Reg FD and which affected all traded firms' information environments. Specifically, by examining the relative difference in changes in pre- versus post- information proxies for US versus ADR firms, we provide a more powerful test of effects unique to Reg FD. Across all tests, we find that US firms' information environments changed no more nor no less than those of ADRs, suggesting that Reg FD itself had little effect on the aspects of US firms' environments we consider.

Keywords: Reg FD, foreign-listed firms. information environment

JEL Classification: M41, M45, M47, G38