Disclosure Dissemination and Investment Decision

• In Event: Concurrent Session 1.3: Financial Reporting and Disclosures

Abstract

This paper examines how disclosure dissemination affects firms’ investment policy. We find that continental European firms that disseminate their disclosures through English-speaking wire services exhibit higher sensitivity of their investment to growth opportunities. This finding suggests that higher dissemination of firm-imitated disclosures results in lower asymmetry between managers and investors and higher investment efficiency. Cross-sectional analyses show that the effect of disclosure dissemination on investment is magnified for firms with higher level of disclosure and for firms operating in countries with higher standard of disclosure. This paper provides evidence that disclosure dissemination acts as a complements to higher financial reporting quality by improving investment decision within the firm.

Author

• Romain Boulland, Université Paris-Dauphine