Discontinued SEC required disclosures: The value of repairs and maintenance expenses

On December 13, 1994, the US Securities and Exchange Commission (SEC) eliminated certain schedules including repairs and maintenance (R&M) disclosures previously required in annual reports and registration statements. This SEC decision provides us a research setting where disclosure has been decreased. The purpose of this study is to determine if market participants used R&M information prior to its elimination. The findings indicate that R&M disclosures did provide value-relevant information. Further, the year following the elimination of mandatory R&M disclosures, only 4% of the firms in the sample voluntarily disclosed R&M information. Hence, it appears that decreased disclosures deprived the market participants, not only in principle but also in practice, of value-relevant R&M expenses information. The results also suggest that if R&M disclosures are not required firms will not voluntarily provide the information.