The Real Effects of Modern Information Technologies: Evidence from the EDGAR Implementation

Itay Goldstein, Shijie Yang and Luo Zuo

No 27529, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Using the implementation of the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system from 1993 to 1996 as a shock to information dissemination technologies, we examine how a significant reduction in disclosure processing costs affects the real economy. We find that the EDGAR implementation leads to an increase in corporate investment and that this effect is concentrated in value firms. We provide evidence that improved equity financing and enhanced managerial incentives are likely the underlying mechanisms. Specifically, the EDGAR implementation leads to an increase in a firm’s stock liquidity, a decrease in the cost of equity capital, and an increase in the level of equity financing. Consistent with the monitoring effect of broad information dissemination, the EDGAR implementation leads to an increase in a firm’s operating performance. Our findings suggest that it is important to consider information dissemination beyond information production when examining the real effects of corporate disclosures.

JEL-codes: G12 G14 G31 M41 (search for similar items in EconPapers)
Date: 2020-07
New Economics Papers: this item is included in nep-ict
Note: CF
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Citations: View citations in EconPapers (6)

Published as ITAY GOLDSTEIN & SHIJIE YANG & LUO ZUO, 2023. "The Real Effects of Modern Information Technologies: Evidence from the EDGAR Implementation," Journal of Accounting Research, vol 61(5), pages 1699-1733.

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