Trade secrets law and corporate disclosure: Causal evidence on the proprietary cost hypothesis

By Yinghua Li, Yupeng Lin, Liandong Zhang. 2017

192 citations recorded by the source corpus.

This study exploits the staggered adoption of the inevitable disclosure doctrine (IDD) by U.S. state courts as an exogenous shock that generates variations in the proprietary costs of disclosure. We find that firms respond to IDD adoption by reducing the level of disclosure regarding their customers’ identities, supporting the proprietary cost hypothesis. Our results are stronger for firms in industries with a higher degree of entry threats, for firms in more volatile industries, and for firms with a lower degree of external financing dependence. Overall, this study represents one of the first efforts in identifying the causal effect of proprietary costs of disclosure on the supply of disclosure.

Subfields: Accounting, Economics and Econometrics, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/5f099ff60ed889ed14e84bfc217217992f909e61

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Accounting

1. C. Mangen
2. Artyom Durnev
3. Thierry Foucault
4. L. Frésard
5. Rodrigo S. Verdi

In Economics and Econometrics

1. C. Mangen
2. Artyom Durnev
3. Thierry Foucault
4. L. Frésard

In Strategy and Management

1. C. Mangen
2. Artyom Durnev

Citations in the corpus

• The spillover effects of MD&A disclosures for real investment: The role of industry competition (2019, methodology): “We evaluate the tone of common and firm-specific disclosures using the 2018 version of the word list from Loughran and McDonald (2011).”