Performance volatility, information availability, and disclosure reforms

Renhui Fu, Fang Gao, Yong H. Kim and Buhui Qiu ()

Journal of Banking & Finance, 2017, vol. 75, issue C, 35-52

Abstract: Using the 2002 Sarbanes–Oxley reform as an exogenous disclosure shock, we find that high, relative to low, volatility firms opt for lower levels of information availability pre reform and experience increases in information availability, CEO turnover-to-performance sensitivity, myopic behavior, CEO compensation with a structure tilted towards more cash pay, and a reduction in firm value post the reform. Our findings suggest that mandating high levels of information availability across the board increases managerial evaluation risk and produces additional agency costs for firms with volatile performance.

Keywords: Performance volatility; Information availability; Disclosure reforms (search for similar items in EconPapers)
JEL-codes: G38 M40 M41 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:75:y:2017:i:c:p:35-52

DOI: 10.1016/j.jbankfin.2016.11.011

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