Disaggregated financial statement information in an unregulated environment

[摘要] This paper examines whether disaggregated financial statement information during the late 1920;;s reduced information asymmetry. After controlling for firms endogenously selecting their level of disaggregation, I find that disaggregation reduced the information asymmetry between market participants and between the firm and outside investors. Disaggregators had lower bid-ask spreads and short sellers paid lower loan fees for borrowing disaggregators;; stocks. In addition, disaggregators were more likely to raise capital in the following year. These results are consistent with firms using high-quality financial reporting to reduce information asymmetry even in the absence of regulation as a bonding mechanism.

[发布机构] Massachusetts Institute of Technology