Performance volatility, information availability, and disclosure reforms

Renhui Fu; Fang Gao; Yong H. Kim; Buhui Qiu

doi:10.1016/j.jbankfin.2016.11.011

Journal of Banking & Finance Vol. 75 2017

Performance volatility, information availability, and disclosure reforms

Renhui Fu ¹; Fang Gao²; Yong H. Kim³; Buhui Qiu⁴

¹ Shanghai Jiao Tong University · ² Donghua University · ³ University of Cincinnati Medical Center · ⁴ The University of Sydney

Abstract

Using the 2002 Sarbanes–Oxley reform as an exogenous disclosure shock, we find that high, relative to low, volatility firms opt for lower levels of information availability pre reform and experience increases in information availability, CEO turnover-to-performance sensitivity, myopic behavior, CEO compensation with a structure tilted towards more cash pay, and a reduction in firm value post the reform. Our findings suggest that mandating high levels of information availability across the board increases managerial evaluation risk and produces additional agency costs for firms with volatile performance.

DOI: 10.1016/j.jbankfin.2016.11.011
Volume: 75
Pages: 35-52
Language: en
Sources: openalex crossref bibtex:phds-export.bib

Performance volatility, information availability, and disclosure reforms

Abstract

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