Gomez examines whether the effect of the SEC’s EDGAR system on information asymmetry. Using the system’s gradual rollout, Gomez finds evidence that it increased information asymmetry among less and more sophisticated investors. This effect is more pronounced for companies with longer, more complex filings and fewer analysts covering them. The study suggests that while EDGAR made filings more accessible, only more sophisticated investors seemed to benefit to a greater extent because they can process the newly available information. The study suggests that decreasing information acquisition costs alone is not enough if not all investors are able to integrate or understand the information.
The Effect of Mandatory Disclosure Dissemination on Information Asymmetry Among Investors: Evidence from the Implementation of the EDGAR System
