The Value of Knowing

Abstract

We analyzed the last major imposition of mandatory disclosure requirements in U.S. equity markets. The 1964 Securities Acts Amendments extended several disclosure requirements to large firms traded over-the-counter that had applied to listed firms since 1934. We presented four pieces of evidence that investors valued the new disclosure requirements. The results are consistent with the hypothesis that mandatory disclosure laws can cause managers to focus more narrowly on the maximization of shareholder value.

Keywords: Michael Greenstone, Paul Oyer, Annette Vissing-Jorgensen, mandatory disclosure requirements, equity markets, 1964 Securities Acts Amendments, trade, investing, mandatory disclosure laws, maximization of shareholder value, diversion, equity markets

JEL Classification: D78, D81, E44, E47, E61, E65, F13