Implicit Communications and Enforcement of Corporate Disclosure Regulation

Implicit Communications and Enforcement of Corporate Disclosure Regulation

Ashiq Ali, Jill Fisch, Hoyoun Kyung

Series number :

Serial Number: 

Date posted :

November 13 2019

Last revised :

November 13 2019
SSRN Share


  • Implicit Communications • 
  • Corporate Disclosure Regulation • 
  • SEC Enforcement • 
  • Regulation Fair Disclosure

This study examines the challenge of implicit communications - qualitative statements, tone, and non-verbal cues - to the effectiveness of enforcing corporate disclosure regulations.

We use Regulation FD setting, given that SEC adopted the regulation recognizing that managers can convey non-public information privately not just through explicit quantitative disclosures but also through implicit communications. In a high-profile enforcement action, however, the court focused on a literal examination of the manager’s language rather than his positive spin to conclude that SEC had been “too demanding” in examining the manager’s statements and that its enforcement policy was “overly aggressive.” We provide empirical evidence suggesting that selective disclosure from managers to financial analysts increased significantly after the court’s ruling. We also provide reasons to believe that this consisted, in part, of an increase in implicit communications. Our results highlight the challenges associated with enforcing corporate disclosure regulations in the context of implicit communications.

Published in

Published in: 
Friday, October 25, 2019


Real name:
Ashiq Ali
Real name:
Research Member, Board Member
University of Pennsylvania Law School
Real name:
Hoyoun Kyung