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The Real Effects of Modern Information Technologies

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Title:The Real Effects of Modern Information Technologies
Authors:Itay Goldstein
Shijie Yang
Luo Zuo
Keywords:Corporate Investment
Information Technologies
Equity Financing
Managerial Learning
Date Issued:11 Jul 2020
Abstract:Modern information technologies have greatly facilitated timely dissemination of information to a broad base of investors at low costs. To examine their effects on the real economy, we exploit the staggered implementation of the EDGAR system from 1993 to 1996 as a shock to information dissemination technologies. We find that the EDGAR implementation leads to an increase in the level of corporate investment but a decrease in the investment-to-price sensitivity. We provide evidence that improved equity financing and reduced managerial learning from prices are the underlying mechanisms that explain these real effects, respectively. In addition, we show that the EDGAR implementation leads to an improvement in performance in value firms but a decline in performance in high-growth firms where learning from the market is particularly important.
Appears in Collections: 10 Financial Accounting 3: Determinants and consequences of financial reporting attributes

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