Informing the Market: The Effect of Modern Information Technologies on Information Production

Meng Gao, Jiekun Huang

Research output: Contribution to journalReview article

Abstract

Modern information technologies have fundamentally changed how information is disseminated in financial markets. Using the staggered implementation of the EDGAR system from 1993 to 1996 as a shock to information dissemination technologies, we find evidence that internet dissemination of corporate disclosures increases information production by corporate outsiders. Trades by individual investors, especially those with access to the internet, become more informative about future stock returns following the EDGAR implementation. The amount and accuracy of information produced by sell-side analysts increase after the implementation. These results suggest that greater and broader information dissemination facilitated by modern information technologies improves information production.

Original languageEnglish (US)
Pages (from-to)1367-1411
Number of pages45
JournalReview of Financial Studies
Volume33
Issue number4
DOIs
StatePublished - Apr 1 2020

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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