Corporate disclosure dissemination: when more is less

摘要

The U.S. Securities and Exchange Commission's EDGAR on the Internet (EOI) initiative greatly expanded investors' access to corporate disclosure documents. Investors refer to these documents when making investment decisions. Management science literature and the popular press assume that more complete disclosure and more widespread dissemination of these data are always beneficial. On the other hand, the analytical literature in finance and accounting shows that the benefits of disclosure, as measured by investor utility, are not straightforward. In this paper, we adopt a rational expectations equilibrium model to investigate whether investors benefit from the wider dissemination that resulted from EOI. Our analysis shows that many investors are unambiguously hurt by EOI. Moreover, even those investors who previously had no access to the documents are hurt under certain conditions. These results, which have an intuitive basis, suggest that the public policy of wider dissemination requires more carefully articulated motivations.