Peer effects in corporate disclosure decisions*

• 成果类型: Article
• 署名作者: Seo, Hojun
• 署名单位: Purdue University System; Purdue University
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2020.101364
• 发表日期: 2021
• 关键词: product market threats; Board interlocks; stock returns; earnings; CONSEQUENCES; COMPETITION; FIRMS; volatility; attention; investors

摘要

Economic theory suggests that peer effects are present in various contexts: the average behavior of a group influences the behavior of individual group members (Manski,1993). An implicit assumption in most disclosure studies is that a firm's disclosure decision is primarily based on firm-specific factors (Leuz and Wysocki, 2016). However, since firms in the same industry are interdependent (Devenow and Welch,1996; Lieberman and Asaba, 2006; Leary and Roberts, 2014), corporate disclosure decisions could also respond to peer firm disclosure. In this paper, I explore whether disclosures made by industry peers affect a firm's disclosure decisions. Additional cross-sectional tests delve into the mechanisms linking peer effects to disclosure decisions. There are two potential mechanisms underlying peer effects in disclosure. First, peer effects would generate positive This study examines peer effects in corporate disclosure decisions. Peer effects suggest that the average behavior of a group influences the behavior of individual group members. Consistent with peer effects, I find that disclosures made by industry peers induce firm disclosure. Peer effects in disclosure are more pronounced when a firm's strategic un-certainty is higher, indicating that peer firm disclosure reduces the external uncertainty arising from the firm's interaction with its industry peers and thus increases the precision of managerial private information. I also find that peer effects are stronger when a firm's dependence on external financing is greater, suggesting that peer firm disclosure increases the costs on firm visibility and reputation in capital markets. Overall, these findings sug-gest that peer firm disclosure shapes a firm's information environment. (c) 2020 Elsevier B.V. All rights reserved. This study examines peer effects in corporate disclosure decisions. Peer effects suggest that the average behavior of a group influences the behavior of individual group members. Consistent with peer effects, I find that disclosures made by industry peers induce firm disclosure. Peer effects in disclosure are more pronounced when a firm's strategic uncertainty is higher, indicating that peer firm disclosure reduces the external uncertainty arising from the firm's interaction with its industry peers and thus increases the precision of managerial private information. I also find that peer effects are stronger when a firm's dependence on external financing is greater, suggesting that peer firm disclosure increases the costs on firm visibility and reputation in capital markets. Overall, these findings suggest that peer firm disclosure shapes a firm's information environment.