503 Service Unavailable”: When Acquiring Information Goes Wrong



Investors increasingly rely on electronic systems to acquire information. The SEC’s EDGAR system we focus on, for example, receives millions of requests per day for information on publicly listed firms. An unexplored risk of relying on electronic systems is their unexpected downtimes. We assess the effects on stock liquidity when such downtime risk materializes by exploiting a large-scale, unexpected server outage of EDGAR. We find that liquidity worsens for firms more strongly affected by the outage. The outage affects liquidity more adversely when erroneous requests stem from institutional investors and banks, when they are algorithmic in nature, when requests target recent regulatory filings, or when firms have a weaker information environment.