Disaggregated financial statement information in an unregulated environment

This paper examines whether disaggregated financial statement information during the late 1920's reduced information asymmetry. After controlling for firms endogenously selecting their level of disaggregation, I find that disaggregation reduced the information asymmetry between market participants and between the firm and outside investors. Disaggregators had lower bid-ask spreads and short sellers paid lower loan fees for borrowing disaggregators' stocks. In addition, disaggregators were more likely to raise capital in the following year. These results are consistent with firms using high-quality financial reporting to reduce information asymmetry even in the absence of regulation as a bonding mechanism.

Department dc:contributor.department

Sloan School of Management.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2015

Author dc:creator

• Anderson, Joshua David

Advisor dc:contributor.advisor

• John E. Core and Joseph Weber.

• Sloan School of Management.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/100055

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/100055