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

We exploit the adoption of anti-SLAPP (Strategic Lawsuits Against Public Participation) laws—procedures that protect critics from retaliatory lawsuits—to test how freedom of speech affects firms’ cost of equity (COE). Using an imputation-based difference-in-differences design, we find that the enactment of these laws lowers firms’ COE, especially for firms with opaque information environments or weaker governance. Further, we observe declines in information asymmetry, crash risk, firm risk, and undervaluation following adoption. Our results suggest that greater freedom of speech accelerates the credible dissemination of negative information, thereby facilitating the timely diffusion of bad news, mitigating shocks, and reducing mispricing.