Abstract
Regulation in accounting, among other things, attempts to achieve allocative and distribute efficiency in capital markets. The evaluation of regulatory consequences have most been restricted to a study of its impact on the characteristics of stock prices. Lev (1988) suggests alternate methods to evaluate regulatory consequences. Taking his lead, this study evaluates Replacement Cost (RC) disclosures from a distributive efficiency perspective through the use of a relatively new bid-ask methodology. Parametric tests indicate that for certain firms the market-maker does experience a decrease in the level of information asymmetry subsequent to RC disclosures.
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