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Performance volatility, information availability, and disclosure reforms

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  • Fu, Renhui
  • Gao, Fang
  • Kim, Yong H.
  • Qiu, Buhui

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.

Suggested Citation

  • Fu, Renhui & Gao, Fang & Kim, Yong H. & Qiu, Buhui, 2017. "Performance volatility, information availability, and disclosure reforms," Journal of Banking & Finance, Elsevier, vol. 75(C), pages 35-52.
    • Handle: RePEc:eee:jbfina:v:75:y:2017:i:c:p:35-52
    DOI: 10.1016/j.jbankfin.2016.11.011
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    More about this item

    Keywords

    Performance volatility; Information availability; Disclosure reforms;
    All these keywords.

    JEL classification:

    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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