Deposit Supply and Bank Transparency

Does a bank’s dependence on different external funding sources shape its voluntary disclosure of information? We evaluate whether economic shocks that increase the supply of bank deposits alter the cost–benefit calculations of bank managers concerning voluntary information disclosure. We measure information disclosure using 10-K filings, 8-K filings, and earnings guidance. As for the funding shock, we use unanticipated technological innovations that triggered shale development and booms in bank deposits. Further analyses suggest that greater exposure to shale development reduced information disclosure by relaxing the incentives for managers to disclose information to attract funds from external capital markets.