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Journal of Accounting Research Vol. 61 No. 5 2023

The Real Effects of Modern Information Technologies: Evidence from the EDGAR Implementation

Itay Goldstein1; Shijie Yang2; Luo Zuo3,4

1 Wharton School, University of Pennsylvania · 2 Business School Southern University of Science and Technology · 3 Business School National University of Singapore · 4 Samuel Curtis Johnson Graduate School of Management, Cornell University

open access

Abstract

Using the implementation of the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system from 1993 to 1996 as a shock to information dissemination technologies, we examine how a significant reduction in disclosure processing costs affects the real economy. We find that the EDGAR implementation leads to an increase in corporate investment and that this effect is concentrated in value firms. We provide evidence that improved equity financing and enhanced managerial incentives are likely the underlying mechanisms. Specifically, the EDGAR implementation leads to an increase in a firm's stock liquidity, a decrease in the cost of equity capital, and an increase in the level of equity financing. Consistent with the monitoring effect of broad information dissemination, the EDGAR implementation leads to an increase in a firm's operating performance. Our findings suggest that it is important to consider information dissemination beyond information production when examining the real effects of corporate disclosures.

DOI
10.1111/1475-679x.12496
Volume
61
Issue
5
Pages
1699-1733
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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