TY - JOUR
T1 - Disclosure incentives when competing firms have common ownership
AU - Park, Jihwon
AU - Sani, J.
AU - Shroff, N.
AU - White, Hal
N1 - Publisher Copyright:
© 2019 Elsevier B.V.
PY - 2019/4/1
Y1 - 2019/4/1
N2 - 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.
AB - 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.
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U2 - 10.1016/j.jacceco.2019.02.001
DO - 10.1016/j.jacceco.2019.02.001
M3 - Article
AN - SCOPUS:85064268006
SN - 0165-4101
VL - 67
SP - 387
EP - 415
JO - Journal of Accounting and Economics
JF - Journal of Accounting and Economics
IS - 2-3
ER -