More is Less: Publicizing Information and Market Feedback

We study how information acquisition costs affect the informativeness of prices in guiding firm investment decisions. Using the SEC's staggered rollout of the EDGAR web platform as a shock to the cost of acquiring public information, we find that EDGAR reduced investment-Q sensitivity by 35%, despite increasing overall price efficiency. These findings are robust to tests addressing potential non-random assignment to adoption waves and treatment effect heterogeneity. Consistent with a crowding-out channel, any price efficiency gains failed to reveal decision-relevant information to managers. Our findings cast doubt on whether recent innovations in information acquisition and processing will improve allocative efficiency.