Mandated disclosure, stock returns, and the 1964 securities acts amendments
By: Michael Greenstone, Paul Oyer, Annette Vissing-Jorgensen.
Contributors: Oyer, Paul E. 1963-; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 11478; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 11478.
Publisher: National Bureau of Economic Research
Published: 2005
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Disclosure of information -- United States.; Over-the-counter markets -- United States.; Rate of return -- United States.
Description: "The 1964 Securities Acts Amendments extended the mandatory disclosure requirements that had applied to listed firms since 1934 to large firms traded Over-the-Counter (OTC).  We find several pieces of evidence indicating that investors valued these disclosure requirements, two of which are particularly striking.  First, a firm-level event study reveals that OTC firms most impacted by the 1964 Amendments had abnormal excess returns of about 3.5 percent in the weeks immediately surrounding the announcement that they had begun to comply with the new requirements.  Second, we estimate that the most affected OTC firms had abnormal excess returns ranging between 11.5 and 22.1 percent in the period between when the legislation was initially proposed and when it went it went into force, relative to unaffected listed firms and after adjustment for the standard four-factor model.  While we cannot determine how much of shareholders' gains were a transfer from insiders of these same companies, our results suggest that mandatory disclosure causes managers to more narrowly focus on the maximization of shareholder value"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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