Disclosure incentives when competing firms have common ownership
Name
SSRN-id3333451.pdf
Description
Accepted version
Size
795.86 KB
Format
Adobe PDF
Checksum (MD5)
7a93b723f8251c4d9392da2a2d0c88ee
Author(s)
Park, Jihwon
Sani, Jalal
Shroff, Nemit
White, Hal
Date Issued
2019
Journal
Journal of Accounting and Economics
Publisher
Elsevier BV
Version
Author's final manuscript
Abstract
© 2019 Elsevier B.V. This paper examines whether common ownership – i.e., instances where investors simultaneously own significant stakes in competing firms – affects voluntary disclosure. We argue that common ownership (i) reduces proprietary cost concerns of disclosure, and (ii) incentivizes firms to “internalize” the externality benefits of their disclosure for co-owned peer firms. Accordingly, we find a positive relation between common ownership and disclosure. Evidence from cross-sectional tests and a quasi-natural experiment based on financial institution mergers help mitigate concerns that our results are explained by an omitted variable bias or reverse causality. Finally, we find that common ownership is associated with increased market liquidity.
MIT Department
Sloan School of Management
Terms of Use
Creative Commons Attribution-NonCommercial-NoDerivs License
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.1016/J.JACCECO.2019.02.001
