Information asymmetry and capital structure: Evidence from regulation FD

• 成果类型: Article
• 署名作者: Petacchi, Reining
• 署名单位: Massachusetts Institute of Technology (MIT)
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2015.01.002
• 发表日期: 2015
• 关键词: regulation fair disclosure; trade execution costs; INSTITUTIONAL OWNERSHIP; corporate governance; earnings guidance; adverse selection; CONFERENCE CALLS; price formation; managerial; components

摘要

This study uses Regulation Fair Disclosure (FD) as a plausibly exogenous shock to the information environment to identify the causal effect of information asymmetry on corporate financing behavior. Although Regulation FD prevents firms from selectively disclosing material information to market professionals in the equity market, firms can still do so to banks and rating agencies in the debt market. The standard's differential disclosure requirements lead to differential changes in the information environments between the two markets, providing a reasonably useful setting to examine the effect of information asymmetry on firms' capital structure. I find that firms with a high level of information asymmetry increase debt more than firms with a low level of information asymmetry post-Regulation FD. The results suggest that managers adjust the target leverage ratios to rely more on debt when facing higher costs of equity. (C) 2015 Elsevier B.V. All rights reserved.