The New Form 8-K Disclosures

Abstract

The Securities and Exchange Commission (SEC) has mandated new disclosure requirements in Form 8-K, which became effective on August 23, 2004. The SEC expanded the list of items that have to be reported and accelerated the timeliness of these reports. This study examines the market reactions to 8-Ks filed under the new SEC regime and investigates whether periodic reports (10-K/Qs) are less informative under the new 8-K disclosure rules than previously. We observe that the newly required 8-K items constitute over half of all filings and that most firms disclose the required items within the new shortened period (four business days). We find that all disclosed items (old and new) are associated with abnormal volume and return volatility around both the event and the SEC filing dates, but also that some items have significant return drifts after the SEC filings. We find that the information content of periodic reports is not diminished by the more expansive and timely 8-K disclosures under the new guidance, suggesting that investors still use them to interpret the possible effects of material events that occurred earlier. We also find that good news reported in Forms 8-K generate greater market reactions on the event date than bad news, likely because of earlier public disclosure of good news by management.