FINANCIAL DISCLOSURE REGULATION AND INDIRECT ECONOMIC CONSEQUENCES: AN ANALYSIS OF THE SALES DISCLOSURE REQUIREMENT OF THE 1934 SECURITIES AND EXCHANGE ACT |
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| Authors: | Chee W. Chow |
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| Affiliation: | The author is the Vern Odmark Professor of Accountancy at San Diego State University. He is indebted to Barry H. Spicer for encouragement and guidance, and to the anonymous reviewer for suggestions which improved the presentation of results. |
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| Abstract: | This study analyzes an indirect economic consequence of accounting regdations - that of inducing inter-firm wealth transfers. This analysis is applied to the sales disclosure requirement of the 1934 Securities and Exchange Act. Using daily returns to the New York Stock Exchange and over-the-counter stocks, it was found that when Congressional deliberations favored passage of the 1934 Act, mturns to h s which had previously disclosed sales significantly exceeded those of non-sales-disclosing firms. This result is consistent with a wealth transfer having occurred from the latter to the former through an unexpected shift in competitive advantage. |
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