Does Securities Regulation Matter Mandatory Disclosure Excess Stock Volatility and the U.S. 1934 Securities Exchange Act

May 31, 2026

The paper evaluates whether the U.S. Securities Exchange Act of 1934 stabilized markets by imposing mandatory disclosure of information. The study argues that mandatory disclosure can reduce stock manipulation by increasing transparency, which in turn lowers excess stock volatility. Using a review of voluntary disclosure practices by NYSE firms before 1934, the authors compare groups and find larger post-Act volatility declines for firms with poorer disclosure. Liquidity improvements are also larger and link to the volatility reduction, supporting the legislators’ aim to curb excessive market volatility.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages60

Reading Time2 h 31 min

Abstract

Introduction

Mandatory disclosure, transparency, and information asymmetry

Deterrence, legal enforcement frictions, and limits of voluntary disclosure

Motivation for mandated disclosure

FAQs

What is the core research question of the paper?

Whether the U.S. Securities Exchange Act of 1934 significantly stabilized the market through mandatory information disclosure.

How does mandatory disclosure affect stock volatility in the paper’s argument?

Mandatory disclosure is argued to curb stock manipulation by improving transparency, thereby reducing excess stock volatility.

What empirical pattern do the authors find regarding firms with different disclosure quality?

Firms with poorer disclosure practices experienced a significantly greater reduction in volatility after the 1934 Act than firms with better disclosure practices.

May 31, 2026

Upload by Lucas Martin