Disclosure incentives when competing firms have common ownership
© 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...
| Main Authors: | , , , |
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| Other Authors: | |
| Format: | Article |
| Language: | English |
| Published: |
Elsevier BV
2021
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| Online Access: | https://hdl.handle.net/1721.1/136172 |
| _version_ | 1811079545977044992 |
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| author | Park, Jihwon Sani, Jalal Shroff, Nemit White, Hal |
| author2 | Sloan School of Management |
| author_facet | Sloan School of Management Park, Jihwon Sani, Jalal Shroff, Nemit White, Hal |
| author_sort | Park, Jihwon |
| collection | MIT |
| description | © 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. |
| first_indexed | 2024-09-23T11:16:44Z |
| format | Article |
| id | mit-1721.1/136172 |
| institution | Massachusetts Institute of Technology |
| language | English |
| last_indexed | 2024-09-23T11:16:44Z |
| publishDate | 2021 |
| publisher | Elsevier BV |
| record_format | dspace |
| spelling | mit-1721.1/1361722023-12-13T15:03:15Z Disclosure incentives when competing firms have common ownership Park, Jihwon Sani, Jalal Shroff, Nemit White, Hal Sloan School of Management © 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. 2021-10-27T20:34:05Z 2021-10-27T20:34:05Z 2019 2021-04-14T12:59:38Z Article http://purl.org/eprint/type/JournalArticle https://hdl.handle.net/1721.1/136172 en 10.1016/J.JACCECO.2019.02.001 Journal of Accounting and Economics Creative Commons Attribution-NonCommercial-NoDerivs License http://creativecommons.org/licenses/by-nc-nd/4.0/ application/pdf Elsevier BV SSRN |
| spellingShingle | Park, Jihwon Sani, Jalal Shroff, Nemit White, Hal Disclosure incentives when competing firms have common ownership |
| title | Disclosure incentives when competing firms have common ownership |
| title_full | Disclosure incentives when competing firms have common ownership |
| title_fullStr | Disclosure incentives when competing firms have common ownership |
| title_full_unstemmed | Disclosure incentives when competing firms have common ownership |
| title_short | Disclosure incentives when competing firms have common ownership |
| title_sort | disclosure incentives when competing firms have common ownership |
| url | https://hdl.handle.net/1721.1/136172 |
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