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

By Christopher S. Armstrong, Karthik Balakrishnan, Daniel A. Cohen. 2012

317 citations recorded by the source corpus.

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.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/2d83b1a577c6e5025c38e098f9cdf531be01606a

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Citations in the corpus

Do Institutional Investors Demand Public Disclosure (2016, unknown): “Armstrong et al. [2012] show that analyst following decreases in response to plausibly exogenous increases in financial statement informativeness.”
Independent Director Reputation Incentives and Stock Price Informativeness (2017, background): “Our paper therefore adds to the literature on corporate transparency (Leuz and Wysocki, 2016; Lang et al., 2012; Bushman et al., 2004) and more specifically to the literature on transparency and corporate governance (Chen et al., 2015; Armstrong et al., 2012; Ferreira and Laux, 2007).”
Information Asymmetry and Corporate Governance (2015, unknown): “(2011) and Armstrong et al. (2012), among others.”
Monitoring and Corporate Disclosure: Evidence from a Natural Experiment (2013, unknown): “When choosing control variables, we follow prior research that also uses a measure of financial reporting quality or disclosure as a dependent variable (e.g., Anantharaman and Zhang, 2012; Armstrong et al., 2012; Bergstresser and Philippon, 2006; Li, 2008).”
Does PCAOB Inspection Access Improve Audit Quality? An Examination of Foreign Firms Listed in the United States (2016, unknown): “For examples, see Becker et al. (1998), Francis et al.”
Corporate Governance and Firm-Specific Stock Price Crashes (2016, background): “For instance Armstrong et al. (2012) find that information asymmetry and private information gathering decreased following the passage of state antitakeover laws. Similarly, Karamanou and Vafeas (2005) provide evidence that corporate boards and audit committees relate to the quality of voluntary fin”
The Impact of State Ownership on Share Price Informativeness: The Case of the Split Share Structure Reform in China (2012, background): “Armstrong, Balakrishnan, and Cohen (2010) find that information asymmetry decreased and financial statement informativeness increased following passage of antitakeover laws.”
The impact of climate change on the cost of bank loans (2020, background): “As highlighted in Huynh et al. (2020), the inclusion of industry and year fixed effects represents a generalized differencein-differences specification that aids with causal interpretation in a regression setting (Bertrand et al. 2004; Angrist and Pischke 2009; Armstrong et al. 2012).”
Analyst Coverage and Real Earnings Management: Quasi-Experimental Evidence (2014, methodology): “To select appropriate control variables, we follow prior research that also uses measures of accrual-based and real earnings management as dependent variables (e.g., Anantharaman and Zhang, 2012; Armstrong et al., 2012; Li, 2008; Yu, 2008; Zang, 2012).”