The Benefits of Mandatory Disclosure: Evidence from Regulation S-X Article 11

<p>The SEC mandates disclosure of Article 11 pro forma financial statements (pro formas) for acquisitions that exceed one of three bright-line materiality thresholds. Motivated by two theories of mandated disclosure, I test whether pro formas improve analyst forecasts or mitigate incentive alignment problems. Using a fuzzy regression discontinuity design, I provide evidence that pro formas reduce post-acquisition forecast errors and improve target selection. The improvement in forecast accuracy (target selection) is concentrated in acquirers with low analyst following (acquisitions involving third-party advisors), suggesting that benefits to mandated pro forma disclosure depend on the pre-existing information environment.</p>

Author dc:creator

• Kubic, Matthew

Advisors dc:contributor.advisor

• Schipper, Katherine
• Mayew, William

• Accounting
• Article 11
• Mandatory Disclosure
• Pro Forma
• SEC

Handle dc:identifier.uri

https://hdl.handle.net/10161/20928

OAI identifier oai:identifier

oai:dukespace.lib.duke.edu:10161/20928