We examine whether changes in national accounting methods affect equity investors’ perceptions of economic conditions. Our analysis focuses on the 2013 revision in the National Income and Product Accounts that changed the accounting treatment of intellectual property products (IPP) from expensing to capitalizing. We find that equity investors incorporate IPP information into their reactions to industry-level GDP announcements only after the shift to IPP capitalization. We also find that investors adjust their valuation of research and development data from the National Science Foundation (NSF) after IPP capitalization, despite the data being publicly available throughout our sample period. Our findings suggest that national accounting methods influence how investors interpret and react to macroeconomic information.
Revising for third-round review at the Journal of Accounting and Economics
Cybersecurity incidents can have substantial financial and reputational consequences for firms, yet disclosure requirements have historically been driven by consumer- rather than investor-focused regulation. I examine whether the SEC’s new cybersecurity disclosure (CSD) rule, which requires public companies to report material cybersecurity incidents on Form 8-K, enhances the timeliness and informativeness of cybersecurity incident disclosures. I find that 8-Ks are filed more quickly than other disclosure channels following incident discovery, and that after the CSD rule, firms are more likely to file an 8-K, consequently disclosing breaches far more quickly following incident discovery. These initial post-rule 8-Ks are shorter and less specific but also more likely to discuss materiality and to have follow-up 8-Ks. Even after controlling for incident severity, the market response to 8-K disclosures is stronger than the market response to other breach disclosures throughout my sample, consistent with higher quality information, reduced information processing costs, or both. Overall, my findings suggest that the SEC’s CSD rule improves the timeliness and informativeness of cybersecurity incident disclosures despite existing non-SEC disclosure requirements, advancing the SEC’s mission to protect investors and promote efficient markets.
Committee: Beth Blankespoor (Chair), Dawn Matsumoto, Sarah McVay, Jonathan Karpoff
Preparing draft for conference submission
Data analysis stage
Proposal with preliminary results