The Evolving Disclosure Landscape: How Changes in Technology, the Media, and Capital Markets Are Affecting Disclosure

• Published date: 01 May 2015
• Author: DOUGLAS J. SKINNER,GREGORY S. MILLER
• Date: 01 May 2015
• DOI: http://doi.org/10.1111/1475-679X.12075

DOI: 10.1111/1475-679X.12075

Journal of Accounting Research

Vol. 53 No. 2 May 2015

Printed in U.S.A.

The Evolving Disclosure Landscape:

How Changes in Technology, the

Media, and Capital Markets Are

Affecting Disclosure

GREGORY S. MILLER

∗AND DOUGLAS J. SKINNER

†

ABSTRACT

Recent changes in technology and the media are causing significant changes

in how capital markets assimilate and respond to information. We identify

important themes in the disclosure literature and use this as a framework to

discuss the conference papers that appear in this volume. These papers ex-

amine how managers’ disclosure practices are being affected by changes in

technology, the media, and capital markets. While this work makes impor-

tant progress, we discuss how continuing technological change and the emer-

gence of new forms of media offer further opportunities for research on the

role of disclosure in capital markets.

JEL codes: G14; M41

Keywords: conference calls; disclosure; media

1. Introduction

Over the last two decades, the disclosure literature has emerged as one

of the most important areas in accounting research. Interest in this area

has been fueled by a growing realization among researchers that the ways

∗University of Michigan, Ross School of Business; †University of Chicago, Booth School of

Business.

Accepted by Christian Leuz. We are grateful to Philip Berger,Christian Leuz, and Haresh

Sapra for comments on a previous version.

221

Copyright C, University of Chicago on behalf of the Accounting Research Center,2015

222 G.S.MILLER AND D.J.SKINNER

managers communicate information about their firms has meaningful ef-

fects on capital market outcomes. These issues have become even more

critical in recent years as changes in information technology, the media,

and securities markets interact to affect the ways information about firms

is produced, disseminated, and processed. It is clear from talking to CFOs

and other practitioners that managers spend considerable time thinking

about how to manage their firms’ disclosures and that managers believe

their disclosure decisions have first-order value implications.

We provide a framework for characterizing disclosure research and use

this framework to summarize and put into broader context five papers that

were presented at the 2014 Journal of Accounting Research (JAR) confer-

ence and that appear in this issue. Our goal in discussing these papers is

to show how they fit into the preexisting literature and the framework we

present, not to provide a detailed critique of each paper. We also provide

suggestions for future research.

The conference theme was “Disclosure, the Media, and Capital Markets,”

and its aim was to bring together papers that examine how recent changes

in technology, capital markets, and the media affect and are affected by

firms’ disclosure policies. These changes include:

rThe way firms file and report information to regulatory agencies. The

U.S. Securities and Exchange Commission (SEC) now requires firms to

file using EDGAR, which effectively provides real time access to 10-K,

10-Q, and filings required by the agency. The SEC has also mandated

the use of XBRL, which tags financial statement data electronically and

so facilitates investors’ ability to process detailed financial statement

information.

rThe way the media processes and disseminates information about

firms, including the use of machine-driven algorithms that gather and

disseminate news on a continuous basis in real time.

rThe emergence of Big Data.

rThe emergence of social media and its use by companies as part of

their disclosure process, as well as the effect of social media more

broadly on how managers manage the information environment of

their firms given the interactive nature of these platforms.

rThe increasing mobility and declining cost of computing devices with

Internet connectivity and the accompanying increased penetration of

these devices among the population at large.

rThe way technology affects how capital markets process and respond

to news about firms. The last decade has seen the emergence of high-

frequency trading, dark pools, and other changes in the way price for-

mation occurs in capital markets.

While these changes affect the way that information is produced, dissemi-

nated, processed, and traded on, the underlying economic forces that affect

disclosure continue to be important. At the same time, new forces (such as

social media and increased mobility) are emerging, and these forces are