Is more always better? Information acquisition and stock price crash risk

Abstract

We posit that high search intensity on a firm's SEC filings creates capital market pressure on managers to withhold bad news. Using the count of non-robot EDGAR downloads of SEC filings as a proxy for search intensity, we find that high search intensity is related to higher future crash risk. The result is cross-sectionally stronger for firms with higher transient institutional holdings, overconfident CEOs, and more intangibles. Our findings are robust to different measures of crash risk and bad news hoarding. Overall, we highlight one unintended capital market consequence associated with the high intensity of information acquisition.