Jordan Schoenfeld

The Ebert, Simons, and Stecher (2017) disclosure model predicts that weaker firms, i.e., those that have lower operating performance, will make more disaggregated discretionary disclosures than stronger firms, a result somewhat at odds with traditional discretionary disclosure theory that predicts that stronger firms are more likely to voluntarily disclose. We use the IPO S-1 filing setting to test Ebert et al. (2017) and find that higher S-1 disaggregated discretionary disclosure quantity is significantly associated with lower operating performance. Our setting and analyses also plausibly rule out several alternative explanations. JEL Classifications: G30; K22; M40.

Decentralized finance (DeFi) has emerged to offer traditional financial services such as lending, borrowing, and trading without intermediaries (e.g., banks). DeFi transactions are typically executed using a special digital class of contracts called smart contracts. These contracts are self-executing and hard-coded directly on a blockchain. We observe the emergence of a new class of voluntary audits that evaluate the integrity of these contracts. Using a hand-coded sample of about 8,500 smart contract audit reports, we provide some of the first evidence showing that (1) these audits are pervasive, (2) the audit firm market is composed of new technical audit firms, (3) the scope of these audits can span a variety of contract features, (4) the audit inputs and outputs differ substantively from those of conventional financial audits, and (5) the market reacts positively to the release of these audit reports, suggesting that these reports are value-relevant. These findings highlight the demand for novel assurance services driven by blockchain technology.

Activist investors in a firm often voluntarily release information about their governance intentions to the public. Voluntary disclosure theory suggests that an activist investor will disclose when she expects other investors to respond positively and support her in upcoming corporate control contests. We find that activists’ disclosures are accompanied by positive abnormal returns, reductions in bid-ask spreads, and increases in future earnings relative to similar targets without voluntary activist disclosures. Disclosures by activists who demand a board seat (the most common demand) have the highest announcement returns, and disclosers also win proxy contests and directorships more frequently than non-disclosers. These findings suggest that the activist’s beliefs about investor response in both pricing and voting are an important driver of her disclosure choice.

Recent global events have highlighted the importance of supply chain shocks on manufacturing firms' fundamentals. To study this issue systematically, we create a measure of port congestion that is plausibly exogenous to most firms. We find that our measure is significantly associated with changes in firm fundamentals such as inventory levels and profitability. Investors appear to demand an explanation for these changes in fundamentals, which managers supply through increased disclosure. Port congestion is thus an important factor for managers' disclosure choices.

Decentralized finance (DeFi) represents a large capital market where users conduct transactions primarily through digital smart contracts. These contracts are susceptible to cyber-attacks and coding errors that can result in significant financial losses, which has led to the emergence of smart contract audits to reduce information asymmetry and foster trust among DeFi service providers and users. Using a large hand-collected sample of these audit reports from DeFi service providers, we provide some of the first evidence showing that (1) these audits are pervasive, (2) the audit firm market is predominantly composed of new technical audit firms, (3) the scope of these audits can span a variety of contract features, and (4) the market reacts positively to the release of these audit reports, suggesting that these reports are value relevant. These findings highlight the demand for novel assurance services driven by blockchain technology.

Theory predicts the existence of explicit bilateral contracts between firms and expert shareholders. I assemble and analyze a large‐scale data set of these contracts. Using block investments from 1996 to 2018, I find that these contracts involve mainly corporate owners and activist owners, and often specify covenants pertaining to financing, trading, directorships, dividends, joint ventures, corporate investment, financial reporting, and information access. I also find that some of the contract covenants are stated in terms of accounting information, and that the prevalence of these contracts is significantly positively associated with measures of information asymmetry between managers and shareholders. Overall, this study provides some of the first systematic evidence on explicit bilateral contracts between firms and shareholders.