When Speaking Freely Pays: Anti-SLAPP Laws and Firms' Cost of Equity

This study examines how freedom of speech affects firms' cost of equity (COE). Leveraging the adoption of anti-SLAPP (Strategic Lawsuits Against Public Participation) laws—procedures that protect critics from legal intimidation—and an imputation-based difference-in-differences design, we find that these laws lower firms’ COE, especially for firms with opaque information environments, weaker governance, or greater public scrutiny. Information asymmetry, firm risk, undervaluation, and stock price crash risk all decline following adoption. Our findings suggest that stronger free speech accelerates the credible dissemination of negative information, thereby facilitating the timely diffusion of bad news, mitigating shocks, and reducing equity mispricing.