TY - JOUR
T1 - Disclosure incentives when competing firms have common ownership
AU - Park, Jihwon
AU - Sani, J.
AU - Shroff, N.
AU - White, Hal
N1 - Funding Information:
This paper integrates two working papers “Common Institutional Blockholdings and Voluntary Disclosure” by Sani and White, and “Common Ownership and Disclosure Incentives” by Park and Shroff. We thank Matt Bloomfield (the reviewer), Wayne Guay (the editor), Karthik Balakrishnan, Dan Givoly, Jeremiah Green, David Haushalter, Karl Muller, Jed Neilson, Martin Nienhaus, Jordan Schoenfeld, and workshop and conference participants at Cornell University, Frankfurt School of Finance & Management, MIT, Penn State University, University of Buffalo, University of Mannheim and University of Minnesota Empirical Conference for many helpful comments and suggestions. Park gratefully acknowledges financial support from Samsung Scholarship. All errors are our own.
Funding Information:
This paper integrates two working papers “Common Institutional Blockholdings and Voluntary Disclosure” by Sani and White, and “Common Ownership and Disclosure Incentives” by Park and Shroff. We thank Matt Bloomfield (the reviewer), Wayne Guay (the editor), Karthik Balakrishnan, Dan Givoly, Jeremiah Green, David Haushalter, Karl Muller, Jed Neilson, Martin Nienhaus, Jordan Schoenfeld, and workshop and conference participants at Cornell University, Frankfurt School of Finance & Management, MIT, Penn State University, University of Buffalo, University of Mannheim and University of Minnesota Empirical Conference for many helpful comments and suggestions. Park gratefully acknowledges financial support from Samsung Scholarship. All errors are our own.
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.
UR - http://www.scopus.com/inward/record.url?scp=85064268006&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85064268006&partnerID=8YFLogxK
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 -