Disclosure incentives when competing firms have common ownership
By Jihwon Park, Jalal Sani, Nemit Shroff, Halbert White. Journal of Accounting & Economics, 2019
237 citations recorded by the source corpus.
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.
Subfields: Accounting, Finance
View Paper: https://www.semanticscholar.org/paper/c2324aae491d677d6420fc2a4728a171bf1ad036
How researchers see this paper
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In Accounting
- Nemit Shroff
- Rodrigo S. Verdi
- S. Roychowdhury
- Martin Walker
- Beatriz García Osma
- Juan Manuel García Lara
- L. Doukakis
- Daniel A. Cohen
In Finance
- Rodrigo S. Verdi
- Nemit Shroff
- S. Roychowdhury
- L. Doukakis
- Daniel A. Cohen
- Martin Walker
- Byungcherl Charlie Sohn
- Beatriz García Osma
Citations in the corpus
- Institutional Investor Attention and Firm Disclosure (2020, unknown): “See also Park et al. (2019).”
- The effects of financial reporting and disclosure on corporate investment: A review (2019, background): “55 In fact, a rapidly growing body of research finds that when a firm’s investors simultaneously own significant stakes in its competitors, managers are incentivized to reduce investment, increase disclosure and become less competitive (e.g., He and Huang, 2017; Azar et al., 2018; Park et al., 2019)”