Research Seminars

Does the legal protection of free speech change how managers use stock prices to guide corporate investment? We study this question using the staggered enactment of anti-SLAPP laws across U.S. states from 1992 to 2022, a setting that lowers the litigation cost of speaking out and empowers journalists, NGOs, employees, and short sellers to bring firm-specific information into public view. In a stacked difference-in-differences design, we find that stronger free-speech protections reduce the sensitivity of corporate investment to Tobin's Q by roughly 34%. We interpret this through revelatory price efficiency, the component of price informativeness that managers actually learn from: anti-SLAPP laws expand public information about matters managers already know, crowding out private information acquisition about the growth opportunities they most need prices to reveal. Consistent with this composition-shift mechanism, the effect is stronger for firms with higher pre-treatment informed trading and in states with broader statutory protections, and it survives controls for forecasting price efficiency. Channel tests show that anti-SLAPP enactment raises fundamental investor information acquisition, while analyst forecasts pin down the crowded-out information as growth-related: long-horizon forecast accuracy deteriorates even as short-horizon accuracy is unchanged. Cross-sectionally, the decline is most pronounced for firms with high discretionary accruals, low disclosure frequency, and high CEO ability, characteristics tied to greater pre-existing reliance on managerial learning from prices. Our findings reveal an unintended cost of transparency reform: laws that strengthen public discourse and corporate accountability can simultaneously weaken the informational feedback from stock prices to real investment decisions.

We investigate whether audit clients’ climate-related risks disclosure influence audit planning and fees. Using the Task Force on Climate-related Financial Disclosures (TCFD) framework in the UK, we distinguish between clients who mandatorily comply with TCFD (mandatory clients) and those who do not. We find that mandatory TCFD adoption is associated with higher audit fees, but fewer key audit matters disclosed by auditors, suggesting that enhanced climate-related disclosures reduce perceived audit risk through greater transparency, yet do not reduce audit pricing. Cross-sectional analyses reveal important heterogeneity in auditors’ responses to mandatory TCFD adoption. The increase in audit fees is concentrated among clients of small audit firms, while clients of large audit firms experience fee reductions. In addition, auditors apply higher materiality levels to clients with high climate impact, consistent with reduced audit effort. Further tests indicate that mandatory TCFD adoption does not translate into improvement in actual environmental performance. Given the growing interest in climate-related risks in practice and research, our study sheds light on how auditors respond to changes in climate-related disclosure requirements.