Competition and voluntary disclosure: evidence from deregulation in the banking industry

Jeffrey J. Burks (), Christine Cuny (), Joseph Gerakos () and João Granja ()
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Jeffrey J. Burks: University of Notre Dame
Christine Cuny: New York University
Joseph Gerakos: Dartmouth College
João Granja: University of Chicago

Review of Accounting Studies, 2018, vol. 23, issue 4, No 7, 1511 pages

Abstract: Abstract We use the relaxation of interstate branching restrictions under the Interstate Banking and Branching Efficiency Act (IBBEA) to examine how increases in competition affect incumbents’ voluntary disclosure choices. States implemented the IBBEA over several years and to varying degrees, allowing us to identify the effect of increased competition on the voluntary disclosure decisions of both public and private banks. We find that increases in competition are associated with an increase in press releases. Overall, press releases become more negative in tone as entry barriers decrease. However, disclosures by public banks and by banks issuing equity become incrementally positive in tone when entry barriers decrease. Thus, the increase in disclosure is consistent with a dominant incentive to deter entry via negative information, which is mitigated by an incentive to communicate positive information to investors.

Keywords: Voluntary disclosure; Competition; Banking (search for similar items in EconPapers)
JEL-codes: D40 G21 M41 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (32)

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DOI: 10.1007/s11142-018-9463-1

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