This paper investigates the effect of regulation that mandates open access to information on managers' disclosure choices and investors' reactions to disclosures. The recently passed Regulation FD (Reg FD) requires firms to make material disclosures broadly available. Using a sample of firms that previously restricted access to conference calls and a sample of firms that voluntarily allowed unlimited access to their calls in the pre‐Reg FD period, we examine the effect of the new rule on managers' decisions regarding the timing, use, and information content of calls, as well as the effect on investors' trading behavior during the call. Our results indicate that Reg FD had a significant negative impact on managers' decisions to continue hosting conference calls and on their decisions regarding the optimal time to hold the call. However, contrary to the concerns of many critics, the magnitudes of these changes are not large. We do not find evidence that Reg FD decreased the amount of information disclosed during the call period, contrary to the concerns of Reg FD opponents. Finally, we find evidence that the new rule increased price volatility for firms that previously restricted access to their calls (relative to firms that previously held open calls) and that the amount of individual investor trading increased following the rule change. Overall, our results suggest that Reg FD impacted trading during the conference call window for firms most affected by the new regulation.
Skip Nav Destination
Article navigation
1 July 2004
Research Article|
July 01 2004
Managerial and Investor Responses to Disclosure Regulation: The Case of Reg FD and Conference Calls
Brian J. Bushee;
Brian J. Bushee
aUniversity of Pennsylvania.
Search for other works by this author on:
Dawn A. Matsumoto;
Dawn A. Matsumoto
bUniversity of Washington.
Search for other works by this author on:
Gregory S. Miller
Gregory S. Miller
cHarvard University.
Search for other works by this author on:
Online ISSN: 1558-7967
Print ISSN: 0001-4826
American Accounting Association
2004
The Accounting Review (2004) 79 (3): 617–643.
Citation
Brian J. Bushee, Dawn A. Matsumoto, Gregory S. Miller; Managerial and Investor Responses to Disclosure Regulation: The Case of Reg FD and Conference Calls. The Accounting Review 1 July 2004; 79 (3): 617–643. https://doi.org/10.2308/accr.2004.79.3.617
Download citation file:
Pay-Per-View Access
$25.00