The Informational Role of Exhibits As ‘source Files’ in Form 10-K

We study the role of exhibits enclosed in the Form 10-K information bundle, which contains a main file and an average of eight new exhibits. 10-K exhibits provide material documents regarding a wide range of SEC-mandated topics. Relative to the main file, exhibits are less readable, contain more legal words, and adopt more neutral language. We hypothesize that exhibits are used by information users as ‘source files’ to support their processing of the 10-K’s main file. Consistently, we find that users acquire more exhibits in the 10-K’s short-term event window when the main file lacks textual quantity, clarity, and certainty, and when the main file reveals negative financial signals. The acquisition of exhibits in turn strengthens the stock market reaction to the main file. The evidence provides insights into how users assemble the information mosaic within the 10-K information bundle.