This paper considers the extent to which managers’ choice of disclosure channels affects firm stock price. I examine two channels of voluntary disclosures containing large amounts of information: the voluntary portions of SEC filings and firm websites. These channels are quite different, as SEC filings are likely to be more costly for investors to process (in terms of both acquisition and cognitive costs) when compared to firm websites. These textual voluntary disclosures are examined using a topic modeling methodology to identify two constructs: tone difference, defined as the extent to which firm websites have more positive disclosure and less negative disclosure than SEC filings, and disclosure distance, defined as the extent to which the disclosure topics discussed are similar or different across SEC filings and firm websites. Shifting of information is identified, as managers appear to strategically voluntarily disclose similar information across these two channels, but with more bad news disclosed through SEC filings and more good news disclosed through firm websites. In the short run, asymmetry in processing costs leads to investors impounding the good news in firm websites more quickly than the bad news in the voluntary portion of SEC filings, despite information across channels being released contemporaneously. I find that managers are incentivized to make such strategic disclosure channel choices through their stock and option holdings, and that managers’ trading behavior is associated with their firms’ disclosure strategies. Further evidence demonstrates that liquidity helps to facilitate the effects of strategic disclosure channel choices, and that media plays a role in constraining the stock price effects of strategic disclosure channel choices.
| Speaker: | Richard Crowley PhD Candidate, University of Illinois Urbana-Champaign |
| When: |
10.00 - 11.30am |
| Venue: | School of Accountancy Level 4, Meeting Room 4.1 |
| Contact: | Office of the Dean Email: SOAR@smu.edu.sg |