Mandated Disclosure, Stock Returns, and the 1964 Securities Acts Amendments

Michael Greenstone, Paul Oyer () and Annette Vissing-Jorgensen

No 11478, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The 1964 Securities Acts Amendments extended the mandatory disclosure requirements that had applied to listed firms since 1934 to large firms traded Over-the-Counter (OTC). We find several pieces of evidence indicating that investors valued these disclosure requirements, two of which are particularly striking. First, a firm-level event study reveals that OTC firms most impacted by the 1964 Amendments had abnormal excess returns of about 3.5 percent in the weeks immediately surrounding the announcement that they had begun to comply with the new requirements. Second, we estimate that the most affected OTC firms had abnormal excess returns ranging between 11.5 and 22.1 percent in the period between when the legislation was initially proposed and when it went it went into force, relative to unaffected listed firms and after adjustment for the standard four-factor model. While we cannot determine how much of shareholders' gains were a transfer from insiders of these same companies, our results suggest that mandatory disclosure causes managers to more narrowly focus on the maximization of shareholder value.

JEL-codes: G28 G38 K22 L51 M41 M49 N22 (search for similar items in EconPapers)
Date: 2005-07
New Economics Papers: this item is included in nep-fmk and nep-law
Note: AP LE
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Citations: View citations in EconPapers (3)

Published as Greenstone, Michael, Paul Oyer and Annette Vissing-Jorgensen. "Mandated Disclosure, Stock Returns, And The 1964 Securities Acts Amendments," Quarterly Journal of Economics, 2006, v121(2,May), 399-460.

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Journal Article: Mandated Disclosure, Stock Returns, and the 1964 Securities Acts Amendments (2006)
Working Paper: Mandated Disclosure, Stock Returns, and the 1964 Securities Acts Amendments (2005)
Working Paper: Mandated Disclosure, Stock Returns, and the 1964 Securities Acts Amendments
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