We investigate the impact of observing peers’ information acquisition on financial analysts’ allocation of attention. Using the timely disclosure mandate by the Shenzhen Stock Exchange as a setting, we find that, shortly after analysts observe that a firm has been visited by peer analysts, they reduce short‐term attention to that firm, as indicated by a reduced tendency to conduct follow‐up visits. Nonvisiting analysts who do not conduct follow‐up visits are more likely to discontinue coverage of the visited firm. These findings are consistent with the conjecture that the timely disclosure reveals the first‐mover advantage of visiting analysts, leading nonvisiting ones to reallocate their limited attention. We also find that, compared with the pre‐mandate period, the information environments of visited firms deteriorate immediately after an analyst's visit but not over the longer term. Further evidence suggests that the timely disclosure mandate has positive externalities in the form of increased immediate attention to and improved short‐term information environments of unvisited peer firms.

We examine whether the information content of the earnings report, as captured by the earnings response coefficient (ERC), increases when investors’ uncertainty about the manager's reporting objectives decreases, as predicted in Fischer and Verrecchia (2000). We use the 2006 mandatory compensation disclosures as an instrument to capture a decrease in investors’ uncertainty about managers’ incentives and reporting objectives. Employing a difference-in-differences design and exploiting the staggered adoption of the new rules, we find a statistically and economically significant increase in ERC for treated firms relative to control firms, largely driven by profit firms. Cross-sectional tests suggest that the effect is more pronounced in subsets of firms most affected by the new rules. Our findings represent the first empirical evidence of a role of compensation disclosures in enhancing the information content of financial reports.

We use a novel experiment in China to examine the effects of having a quasi-official investor own a small number of shares on specific firm outcomes. We find that, relative to control firms, pilot firms experience an increase in dissenting votes from independent directors, a reduction in tunneling and earnings management activities, and an improvement in merger performance. Independent directors questioned by the quasi-official shareholder in activism events subsequently lose board seats in the director market. Overall, our results shed light on a new mechanism for enhancing the protection of minority shareholders.

We study the use of generative AI for firm‐specific financial analysis on the Seeking Alpha platform. After the initial launch of ChatGPT in November 2022, the share of AI‐generated articles rose sharply to 13.5% of all articles, then declined in late 2023 after Seeking Alpha equated the use of AI to plagiarism and announced a prohibition on its use. We organize our study around two questions: (1) Does AI use increase author productivity? and (2) does AI use have capital market consequences and ultimately affect the informational landscape? We find that authors who adopt AI become more productive, publishing more articles and covering more new firms than non‐adopters. Findings on AI article informativeness are more nuanced. On average, AI articles are less informative than human‐written articles, eliciting smaller trading volume and abnormal return responses. However, AI use leads to increased firm coverage and in turn to improved liquidity and faster price discovery. Our findings suggest that, while AI‐generated articles are currently perceived as less informative than human‐written articles, their comparatively low cost enables increased firm coverage and thereby improves the overall informational landscape.

Prior literature presents various perspectives on the role of financial reporting. One view is that mandatory periodic reporting disciplines managers and encourages timely voluntary disclosure. We examine this “confirmation hypothesis” using the shock to financial reporting quality experienced by Arthur Andersen clients forced to switch auditors. Consistent with the confirmation hypothesis, we find that former Andersen clients increase disclosure after they change auditors. They increase forecasting frequency and enhance forecasting precision and specificity. We present additional cross-sectional evidence that shows Arthur Andersen clients with larger increases in financial reporting quality increased their disclosure by relatively more, even within the sample of Arthur Andersen clients. We supplement our main findings with a battery of tests to reduce the possibility that alternative shocks and uncertainty drive our results. Our findings support complementarity between financial reporting quality and voluntary disclosures.