Keywords

The Freedom of Information Act request, FOIA, information acquisition, value relevance

Abstract

We analyze Freedom of Information Act (FOIA) requests submitted to the Securities and Exchange Commission (SEC), focusing on the value-relevance hypothesis and the directtrading hypothesis. Our empirical analysis reveals nuanced value relevance associated with different types of requests: Requests related to ongoing investigations and submitted by anonymous requesters are negatively correlated with future returns, while requests from investment firms and intellectual property firms predict positive future returns. Our findings also provide some support to the direct-trading hypothesis, showing that investment firms increase holdings of stocks for which they have filed FOIA requests, and short sellers exhibit heightened activity following requests related to ongoing investigations or those from anonymous requesters. Our findings contribute to the literature by linking information acquisition to market outcomes, highlighting the interplay between the information market and the securities market.

Original Publication Citation

Bao, Dichu and Brendel, Janja and Drake, Michael S. and Su, Lixin (Nancy), The Information Content of Private Information Acquisition: Evidence from FOIA Requests to the SEC (April 30, 2025). Available at SSRN: https://ssrn.com/abstract=5271571 or http://dx.doi.org/10.2139/ssrn.5271571

Document Type

Peer-Reviewed Article

Publication Date

2025

Publisher

Hong Kong University Business School: HKU Jockey Club Enterprise Sustainability Global Research Institute Paper Series

Language

English

College

Marriott School of Business

Department

Accountancy

University Standing at Time of Publication

Full Professor

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