Mandatory vs. Contractual Disclosure in Securities Markets: Evidence from the 1930s

47 Pages Posted: 23 Feb 2006

See all articles by Paul G. Mahoney

Paul G. Mahoney

University of Virginia School of Law

Jianping Mei

New York University (NYU) - Department of Finance

Date Written: February 2006

Abstract

This paper studies mandatory disclosure documents filed during the period 1933-35 in response to the Securities Act of 1933 and the Securities Exchange Act of 1934. Our sample companies are all listed on the New York Stock Exchange (NYSE) and therefore subject to the NYSE's disclosure requirements at the time of the regulatory filings. We ask whether the additional disclosures contained in the filed documents constitute information. Using newly-available daily price, volume, and bid and ask quotation data, we test whether the filings are associated with changes in bid-ask spreads, return autocovariance, turnover, volatility, or no-trade days. We find almost no evidence that the new disclosures required by the securities laws - principally having to do with management compensation and large shareholdings - reduced informational asymmetry. We also find no evidence that earnings reports were more informative after enactment of the securities laws.

Keywords: Mandatory disclosure, securities laws

JEL Classification: G38, K22

Suggested Citation

Mahoney, Paul G. and Mei, Jianping, Mandatory vs. Contractual Disclosure in Securities Markets: Evidence from the 1930s (February 2006). Available at SSRN: https://ssrn.com/abstract=883706 or http://dx.doi.org/10.2139/ssrn.883706

Paul G. Mahoney (Contact Author)

University of Virginia School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States
434-924-7121 (Phone)
434-924-7536 (Fax)

Jianping Mei

New York University (NYU) - Department of Finance ( email )

Stern School of Business
44 West 4th Street
New York, NY 10012-1126
United States
212-998-0354 (Phone)
212-995-4221 (Fax)

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