Market Effects of SEC Regulation of Short-Term Borrowing Disclosure

This study uses equal-weighted portfolios of financial and non-financial SEC registrants to examine the market reaction to proposed SEC short-term borrowing disclosure regulation. Using event study methodology and two event dates -- that is, announcement and voting dates -- we find that the market reaction is positive and significant at the announcement date and negative and significant at the voting date. Overall, the paper documents a positive market reaction, indicating the usefulness of the disclosure from the vantage point of users. The results for various subsets, including commercial banks and saving institutions, bank holding companies, size quartiles, and exchange-listed and OTC registrants, were also examined and compared. In general, they confirm expectations and are robust to alternate specifications using value-weighted portfolios. The study also provides evidence that a “one-size-fits-all” approach to regulation is undesirable.