Voluntary disclosures and monetary policy: evidence from quantitative easing

Abstract

This study investigates the influence of central bank private-sector quantitative easing (QE) policies on firms’ voluntary disclosures. While the effects of QE on borrowing costs and asset prices are well documented, spillovers in the disclosure realm remain understudied. This study specifically analyzes the effects of the Corporate Sector Purchase Program (CSPP), a private-sector QE policy implemented by the European Central Bank (ECB) in 2016 targeting corporate bonds in the euro area. Applying a difference-in-differences methodology to pre- and post-CSPP periods, I find that firms whose bonds the central bank purchased under the CSPP decreased their voluntary disclosures, particularly those related to cash flows and liabilities. My analysis attributes this decrease to reduced demand for firm-specific information from the central bank. My findings highlight the indirect consequences of QE monetary policy tools on corporate disclosure and contribute to the understanding of the transmission of monetary policy and investor-clientele dynamics.