How Cheap Is Corporate Talk? Comparing Companies' Comments on Regulations With Their Securities Disclosures

摘要

Two audiences—environmental regulators and investors—both need to know how regulations may impact public companies. But when they face adverse regulations, corporate talk is cheap: oil companies made very different predictions about the impact of the Renewable Fuel Standard in their comments and securities disclosures. Fortunately, by measuring this discrepancy, this study will help regulators, investors, and companies to cure it. Regulators must integrate review of securities disclosures into their rulemaking process to gain a more accurate picture of the risks they are imposing on industry. On the flip-side, securities regulators and investors should review comments on regulation to identify regulatory risks that companies are not disclosing. Finally, corporate counsel should anticipate this scrutiny by harmonizing the messages it sends in comments and disclosures.