Are There Externalities of Private Firm News Disclosure? Evidence from Public Firms' Investment

• 成果类型: Article
• 署名作者: Chen, Feng; Ding, Yi; Du, Xingqiang; Tseng, Kevin; Wang, Xiaoqiao
• 署名单位: University of Toronto; The Chinese University of Hong Kong, Shenzhen; The Chinese University of Hong Kong, Shenzhen; Xiamen University; Chinese University of Hong Kong; National Taiwan University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2023-0306
• 发表日期: 2025
• 页码: 103-130

摘要

This study examines whether and how voluntary news disclosure made by private firms affects investment sensitivities of public peer firms. Analyzing data from U.S. public firms from 1996 to 2018, we discover that public firms' investment sensitivities intensify in industries with active private firm disclosures; a one standard deviation increase in private firm news disclosure raises public firms' investment sensitivities by 14.5-17.6 percent. To mitigate endogeneity, we employ instrumental-variable methods, leveraging the staggered implementation of prudent investor rules and enforceability of noncompete agreements. Our results show that these effects are magnified in industries marked by the higher expected industry return volatility and less local newspaper coverage. We find that news from private firms significantly enhances public firms' investment sensitivities, regardless of its sentiment. This research highlights the crucial role of private firm disclosures in influencing public firms' investment decisions, enhancing our understanding of information spillovers in corporate disclosure.