RegTech Adoption and the Cost of Capital
研究美国证监会EDGAR系统分阶段实施如何降低企业权益资本成本，通过流动性、风险承担和公司治理渠道发挥作用，对小公司、低分析师覆盖和低机构持股的企业影响更强。
This paper studies the cost of capital effect of a major regulatory technology, or RegTech, event: the staggered implementation of the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system of the Securities and Exchange Commission in the period from 1993 to 1996. This event represents a largely exogenous shock to corporate information dissemination technologies, resulting in a considerable reduction in information acquisition costs for investors. Using a difference-in-differences research design, we show that the cost of equity capital declines substantially after a firm switches from paper filing to mandatory electronic filing in EDGAR. The effect is stronger for small firms and firms with low analyst coverage and low institutional ownership. We identify three channels through which EDGAR affects a firm’s cost of capital: the liquidity, risk-taking, and corporate governance channels. EDGAR implementation also improves a firm’s investment efficiency significantly. We find evidence that the marginal value of a firm’s capital investment and cash is higher during the post-EDGAR period. This paper was accepted by Suraj Srinivasan, accounting. Funding: C. Lin acknowledges financial support from the National Science Foundation of China [Grant 72192841] and the Research Grants Council of the Hong Kong Special Administration Region, China [Project HKU R7054-18 and T35/710/20R]. S. Lai acknowledges financial support from the Ministry of Science and Technology, Taiwan [Grants 107-2410-H-002-038-MY3 and 110-2410-H-002-079-MY2] and the E. Sun Academic Award. X. Ma acknowledges research support from the University of Macau [Grants SRG2019-00158-FBA and MYRG2020-00259-FBA]. Supplemental Material: Data are available at https://doi.org/10.1287/mnsc.2022.4660 .