Company Websites A New Measure Of Disclosure - Research Summary

Published

November 18, 2025

Paper Summary

Research Question
The paper investigates whether company websites constitute a meaningful channel for public disclosure and how the extent of website disclosure relates to information asymmetry and capital‑market outcomes. It addresses a gap in the literature that has largely focused on regulatory filings, overlooking the growing use of websites—especially by private firms and for non‑financial information.

Contribution
The authors develop a novel, data‑driven measure of website disclosure using historical snapshots from the Wayback Machine. They validate this measure against established proxies (management forecasts, 8‑K word counts, 10‑K file size, disclosure quality) and demonstrate its predictive power for reducing bid‑ask spreads and for attracting private‑equity transactions. The study also maps website content into substantive categories (PSP, IR, geography, HR) and explores determinants of disclosure for both public and private firms.

Theory
The analysis rests on disclosure and signaling theory: firms disclose information to reduce asymmetry and signal quality to investors and other stakeholders. Recent evidence that U.S. firms substitute EDGAR filings with website content since 2008 underpins the theoretical expectation that richer website disclosure should improve market efficiency. The categorization of website content reflects the idea that firms tailor information to the informational needs of distinct audiences (customers, investors, regulators).

Economic Mechanism
Extensive website disclosure provides timely, accessible information that lowers investors’ uncertainty, thereby narrowing bid‑ask spreads. For private firms, a larger, more informative website signals firm quality and transparency, making them more attractive to equity investors and increasing the likelihood of private‑equity transactions. The mechanism is mediated by the volume and type of content (e.g., investor relations, product details) that directly addresses stakeholder information demands.

Research Design
The empirical strategy combines archival web data (Wayback Machine) with firm‑level financial and market data from COMPUSTAT, CRSP, IBES, Orbis, and Zephyr. The public‑firm sample includes 5,234 U.S. firms with 198,316 firm‑quarter observations (1997‑2020); the private‑firm sample comprises 2.8 million firms, with a subset of 371 French public firms. Website size is measured as the natural log of total bytes, and content shares are derived from bag‑of‑words analyses. Outcomes include the natural log of bid‑ask spreads and the probability of a private‑equity transaction. Estimation employs OLS regressions with year‑quarter, industry, and firm fixed effects, clustering standard errors at the firm or industry level, and controlling for established disclosure proxies.

Results
Website size is strongly positively correlated with management forecasts, voluntary 8‑K word counts, disclosure quality, and 10‑K file size, confirming its validity as a disclosure proxy. After controlling for firm, industry, and time effects, larger website size is associated with significantly lower bid‑ask spreads. Public‑firm regressions show that larger firms, B2B firms, and those with more analyst coverage have larger websites. For private firms, a 10 % increase in website size raises the probability of a 2019 equity transaction by approximately 2.6 %, a statistically significant elasticity. Compliance with the French Gender Equality Index is positively linked to higher website disclosure, with private firms exhibiting lower compliance but greater strategic prominence.

Conclusion
The study establishes company websites as a credible, informative disclosure channel that reduces information asymmetry and facilitates capital access, particularly for private firms. The findings suggest that firms should invest in comprehensive, stakeholder‑tailored web content, and that regulators might consider encouraging website disclosure as a complement to traditional filings. Future research could extend this framework to other jurisdictions and explore the causal impact of website disclosure on firm performance.

AI Generated Summary

Generated by Paper Summarizer using Ollama (Model: gpt-oss:20b)

--- title: "Company Websites A New Measure Of Disclosure - Research Summary" date: "2025-11-18" format: html --- # Paper Summary **Research Question** The paper investigates whether company websites constitute a meaningful channel for public disclosure and how the extent of website disclosure relates to information asymmetry and capital‑market outcomes. It addresses a gap in the literature that has largely focused on regulatory filings, overlooking the growing use of websites—especially by private firms and for non‑financial information. **Contribution** The authors develop a novel, data‑driven measure of website disclosure using historical snapshots from the Wayback Machine. They validate this measure against established proxies (management forecasts, 8‑K word counts, 10‑K file size, disclosure quality) and demonstrate its predictive power for reducing bid‑ask spreads and for attracting private‑equity transactions. The study also maps website content into substantive categories (PSP, IR, geography, HR) and explores determinants of disclosure for both public and private firms. **Theory** The analysis rests on disclosure and signaling theory: firms disclose information to reduce asymmetry and signal quality to investors and other stakeholders. Recent evidence that U.S. firms substitute EDGAR filings with website content since 2008 underpins the theoretical expectation that richer website disclosure should improve market efficiency. The categorization of website content reflects the idea that firms tailor information to the informational needs of distinct audiences (customers, investors, regulators). **Economic Mechanism** Extensive website disclosure provides timely, accessible information that lowers investors’ uncertainty, thereby narrowing bid‑ask spreads. For private firms, a larger, more informative website signals firm quality and transparency, making them more attractive to equity investors and increasing the likelihood of private‑equity transactions. The mechanism is mediated by the volume and type of content (e.g., investor relations, product details) that directly addresses stakeholder information demands. **Research Design** The empirical strategy combines archival web data (Wayback Machine) with firm‑level financial and market data from COMPUSTAT, CRSP, IBES, Orbis, and Zephyr. The public‑firm sample includes 5,234 U.S. firms with 198,316 firm‑quarter observations (1997‑2020); the private‑firm sample comprises 2.8 million firms, with a subset of 371 French public firms. Website size is measured as the natural log of total bytes, and content shares are derived from bag‑of‑words analyses. Outcomes include the natural log of bid‑ask spreads and the probability of a private‑equity transaction. Estimation employs OLS regressions with year‑quarter, industry, and firm fixed effects, clustering standard errors at the firm or industry level, and controlling for established disclosure proxies. **Results** Website size is strongly positively correlated with management forecasts, voluntary 8‑K word counts, disclosure quality, and 10‑K file size, confirming its validity as a disclosure proxy. After controlling for firm, industry, and time effects, larger website size is associated with significantly lower bid‑ask spreads. Public‑firm regressions show that larger firms, B2B firms, and those with more analyst coverage have larger websites. For private firms, a 10 % increase in website size raises the probability of a 2019 equity transaction by approximately 2.6 %, a statistically significant elasticity. Compliance with the French Gender Equality Index is positively linked to higher website disclosure, with private firms exhibiting lower compliance but greater strategic prominence. **Conclusion** The study establishes company websites as a credible, informative disclosure channel that reduces information asymmetry and facilitates capital access, particularly for private firms. The findings suggest that firms should invest in comprehensive, stakeholder‑tailored web content, and that regulators might consider encouraging website disclosure as a complement to traditional filings. Future research could extend this framework to other jurisdictions and explore the causal impact of website disclosure on firm performance. :::{.callout-note} # AI Generated Summary Generated by Paper Summarizer using Ollama (Model: gpt-oss:20b) :::