53rd CARF Seminar: Free Speech, the Right to Petition, and Corporate Financing

Wednesday, June 12, 2024 10：30 – 12:00（Pre-registeration necessary)

Seminar Room 2, 1F of Economics Research Annex (Kojima Hall)
https://www.carf.e.u-tokyo.ac.jp/access/#campusmap

English

Hyun A (Shana) Hong
Associate Professor, University of California, Riverside
(co authored with Paul Zarowin and Ji Woo Ryou)

The theory shows that corporate managerial disclosure can have real effects on financing and labor policies. Using the passage of state-level anti-SLAPP legislation as a plausible exogenous shock to firm stakeholders’ free speech and the right to petition, we theorize that the efficiency of corporate financing and employment improves after the passage. Supporting this theory, we find that external and human capital become more sensitive to firm growth opportunities and less sensitive to firm internal resources following the passage. Our results further suggest that the improvement arises from the increased divulgence of firm stakeholders’ negative, and potentially nonpublic, information about a corporation. This in turn reduces a corporate manager’s capacity to withhold adverse information, thus incentivizing timelier and fuller disclosure. The lower informational asymmetry enables outside capital providers as well as entrant and current employees to distinguish firm growth options in allocating their capital and human labor. Our results hold under a series of robustness tests. Our study documents a significant economic consequence of state-level anti-SLAPP legislation.