Selective Disclosure and the Role of Form 8-K in the Post-Reg FD Era

Abstract

We investigate whether Form 8-K disclosures mitigate analysts’ information advantage in the presence of initial selective disclosure. Using cross-sectional variation in firms’ social connections with the investment community to identify firms prone to selective disclosure, we show that the precision and the relative amount of analysts’ private information are higher prior to 8-K filings for connected firms, consistent with selective disclosure. More importantly, 8-K filings attenuate the influence of social connections on the quality and quantity of analysts’ private information. Additional analyses reveal that this leveling of the information playing field is concentrated among 8-Ks filed to comply with Reg FD.