Persistent Costs of Disclosure Exemption Regulation

This paper investigates the long-term costs of size-based disclosure exemption regulation. Prior literature documents that companies react to exemption thresholds by sacrificing resources to actively lower their size and avoid compliance of reporting requirements. Exploiting the Smaller Reporting Companies’ (SRCs) threshold update in 2018, I examine whether the investment-sacrificing behavior of companies is timely reversed once the SRC threshold is lifted. I hypothesize and find evidence that size manipulation is not reversed until at least two years after the SRC threshold update, imposing persistent costs on smaller companies that have been previously overlooked by the literature. As such, the effects of a size-based threshold may not be trivially undone, adding another layer of complexity to size-based regulatory interventions.

Name thesis:degree_name

Master

Department dc:contributor.department

Sloan School of Management

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2022

Author dc:creator

• Voelcker, Gabriel

Advisor dc:contributor.advisor

• Verdi, Rodrigo

Statement dc:rights

• In Copyright - Educational Use Permitted
• Copyright MIT

Licence dc:rights.uri

• http://rightsstatements.org/page/InC-EDU/1.0/

Handle dc:identifier.uri

https://hdl.handle.net/1721.1/145181

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/145181