Information acquisition costs and price informativeness: global evidence

Charles G. McClure (), Shawn X. Shi and Edward M. Watts
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Charles G. McClure: The University of Chicago, Booth School of Business
Shawn X. Shi: University of Washington, Michael G. Foster School of Business
Edward M. Watts: Yale School of Management

Review of Accounting Studies, 2025, vol. 30, issue 3, No 7, 2468-2507

Abstract: Abstract We study how global changes in information acquisition costs through disclosure technologies affect price informativeness. To explore this issue, we examine worldwide adoptions of centralized electronic disclosure systems, which significantly reduce the cost of and broaden access to financial disclosures. Consistent with theory, we show a significant reduction in private information acquisition around earnings announcements as a result of these adoptions. These effects are most pronounced in countries with the most substantial reductions in information acquisition costs and where we find more significant decreases in informed trade. Overall, we highlight an important, unintended cost of broadening access to financial disclosures through technology adoptions.

Keywords: Disclosure; Information acquisition; Price efficiency; Price informativeness; Earnings announcements (search for similar items in EconPapers)
JEL-codes: G12 G14 G31 M41 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s11142-025-09906-3

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