Discontinued SEC Required Disclosures: the Value of Repairs and Maintenance Expenditures using a Variance Decomposition Approach

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Behn, Bruce K; Riley, Richard; Gotti, Giorgio; Brooks, Richard C
Repairs and Maintenance Expenses; SEC; Mandatory Disclosures; Value Relevance; Variance Decomposition; Business
paper description
On December 13, 1994, the Securities and Exchange Commission (SEC) eliminated certain schedules that included repairs and maintenance (R&M) disclosures previously required in annual reports and registration statements filed with the SEC. The purpose of this research is to determine if market participants utilized R&M information when making investment decisions. Resulting from a variance decomposition approach, the findings indicate that market participants did use R&M disclosures in their investment decisions. Thus, as a possible policy implication of this research, the SEC may want to reconsider the decision to eliminate the required R&M expenditure disclosures.