Joint Meeting of the Mid-Atlantic and Northeast Regions

How Does RegTech Development Affect Corporate Liquidity Management? Evidence from EDGAR Implementation

• In Event: Information Acquisition and Investor Reactions

Abstract

Exploiting the staggered implementation of the EDGAR system from 1993 to 1996 as exogenous shocks to the development of regulatory technologies (RegTech), we document that firms hoard more cash following the implementation of EDGAR. This effect is more pronounced for firms faced with a higher degree of information uncertainty. Furthermore,
EDGAR implementation discourages informed trading, and the saving-to-price sensitivity decreases while the value of cash increases for the EDGAR filing firms. Our overall findings indicate that EDGAR implementation crowds out informed investors and increase the information uncertainty of firms, leading to a stronger incentive to hoard cash.

Authors

• Dongxu Li, Xiamen University

• Xiaoran Ni, Xiamen University

• David Yin, Miami University