Corporate disclosure in a voluntary reporting environment: NYSE-listed firms in 1900

Abstract

This paper examines the financial reporting done by firms listed on the New York Stock Exchange in 1900 and the firm characteristics that determined what and how much firms would disclose. At this time, there were no federal disclosure mandates or stringent requirements imposed by the Exchange. Therefore, the reporting done by firms was largely voluntary and resulted in significant variation across companies and industries. I look at all 191 firms that listed stocks on the NYSE in this year and use data from Moody’s Manual of Industrial and Miscellaneous Securities and Poor’s Manual of the Railroads of the United States to determine the amount of financial disclosure. I find that more capital-intensive firms were more likely to report income statements and balance sheets and provided more volume of information. In addition, food, mining, and miscellaneous service firms disclosed the least. In addition, all else equal, the age of a company and offering preferred stock did not significantly increase its likelihood of reporting financial statements. Overall, the results indicate that even absent regulation, firms would voluntarily provide information but at varying degrees based on how much the company relies on outside investors and whether its industry is competitive. They also suggest that managers considered potential or explicit investor demand for financial information and responded to this demand.