Is more always better? Information acquisition and stock price crash risk

Simon Yu Kit Fung, Ankit Jain and Moumita Tiwari

Economics Letters, 2024, vol. 236, issue C

Abstract: We posit that high search intensity on a firm's SEC filings creates capital market pressure on managers to withhold bad news. Using the count of non-robot EDGAR downloads of SEC filings as a proxy for search intensity, we find that high search intensity is related to higher future crash risk. The result is cross-sectionally stronger for firms with higher transient institutional holdings, overconfident CEOs, and more intangibles. Our findings are robust to different measures of crash risk and bad news hoarding. Overall, we highlight one unintended capital market consequence associated with the high intensity of information acquisition.

Keywords: Information acquisition; EDGAR search; Crash risk; Bad news hoarding (search for similar items in EconPapers)
JEL-codes: G01 G32 M41 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:236:y:2024:i:c:s0165176524000570

DOI: 10.1016/j.econlet.2024.111574

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