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Corporate governance and the information environment: Evidence from state antitakeover laws

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Author Info

  • Armstrong, Christopher S.
  • Balakrishnan, Karthik
  • Cohen, Daniel

Abstract

We examine the relation between corporate governance and firms' information environments. We use the passage of state antitakeover laws in the U.S. as a source of exogenous variation in an important governance mechanism to identify changes in firms' information environments. We find that information asymmetry and private information gathering decreased and that financial statement informativeness increased following the passage of the antitakeover laws. Cross-sectional analyses indicate that the increased level of financial statement informativeness is attributable to firms that are most likely to access equity markets rather than managerial entrenchment, managerial career concerns, or managers' pursuit of the quiet life.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Accounting and Economics.

Volume (Year): 53 (2012)
Issue (Month): 1 ()
Pages: 185-204

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Handle: RePEc:eee:jaecon:v:53:y:2012:i:1:p:185-204

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Web page: http://www.elsevier.com/locate/jae

Related research

Keywords: Antitakeover laws; Corporate governance; Financial reporting quality; Information asymmetry;

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References

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Cited by:
  1. Kuo, Jing-Ming & Ning, Lutao & Song, Xiaoqi, 2014. "The Real and Accrual-based Earnings Management Behaviors: Evidence from the Split Share Structure Reform in China," The International Journal of Accounting, Elsevier, vol. 49(1), pages 101-136.
  2. Irani, Rustom M. & Oesch, David, 2013. "Monitoring and corporate disclosure: Evidence from a natural experiment," Journal of Financial Economics, Elsevier, vol. 109(2), pages 398-418.
  3. : Panayiotis C. Andreou & : Constantinos Antoniou & : Joanne Horton & : Christodoulos Louca, 2013. "Corporate Governance and Firm-Specific stock Price Crashes," Working Papers wpn13-06, Warwick Business School, Finance Group.
  4. Ding, Rong & Hou, Wenxuan & Kuo, Jing-Ming & Lee, Edward, 2013. "Fund ownership and stock price informativeness of Chinese listed firms," Journal of Multinational Financial Management, Elsevier, vol. 23(3), pages 166-185.

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