The Role of Market Forces and Regulation in Disclosure: Evidence from Cyber Risk Factors

Economic theory generally argues that market forces induce managers to disclose their private information and yet disclosure regulation is pervasive in practice. Using the setting of cyber risk disclosures, I speak to the debate regarding the effectiveness of both market forces and regulation in eliciting disclosure. I find that market forces (specifically, investor demand for managers’ private information) and disclosure regulation have contrasting effects: market forces are associated with higher disclosure quality (i.e., specificity and uniqueness) while regulation is associated with higher disclosure quantity (i.e., amount). These results are robust to a battery of sensitivity analyses, including controlling for the potentially confounding effect of enforcement. I also find that disclosure quality, rather than quantity, is informative to investors. Although subject to important caveats, my collective evidence provides a potential rationale for the pervasiveness of disclosure regulation (i.e., an increase in disclosure quantity) but is also consistent with the narrative that disclosure regulation can be counterproductive.

Name thesis:degree_name

Ph.D.

Level thesis:degree_level

doctoral

Discipline thesis:degree_discipline

Graduate College

Grantor dc:publisher

The University of Arizona.

Year dc:date.issued

2020

Author dc:creator

• Ashraf, Musaib

Advisor dc:contributor.advisor

• Sunder, Jayanthi

Committee members dc:contributor.committeemember

• Mergenthaler, Rick
• Michas, Paul
• Sunder, Shyam

Statement dc:rights

• Copyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction, presentation (such as public display or performance) of protected items is prohibited except with permission of the author.

Language dc:language.iso

en

Handle dc:identifier.uri

http://hdl.handle.net/10150/650756

OAI identifier oai:identifier

oai:repository.arizona.edu:10150/650756