Disclosure incentives when competing firms have common ownership

Jihwon Park, J. Sani, N. Shroff, Hal Derric White

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

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.

Original languageEnglish (US)
Pages (from-to)387-415
Number of pages29
JournalJournal of Accounting and Economics
Volume67
Issue number2-3
DOIs
StatePublished - Apr 1 2019

Fingerprint

Ownership
Incentives
Disclosure
Mergers
Investors
Financial institutions
Omitted variable bias
Proprietary costs
Market liquidity
Causality
Externalities
Peers
Natural experiment
Voluntary disclosure

All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance
  • Economics and Econometrics

Cite this

Park, Jihwon ; Sani, J. ; Shroff, N. ; White, Hal Derric. / Disclosure incentives when competing firms have common ownership. In: Journal of Accounting and Economics. 2019 ; Vol. 67, No. 2-3. pp. 387-415.
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Disclosure incentives when competing firms have common ownership. / Park, Jihwon; Sani, J.; Shroff, N.; White, Hal Derric.

In: Journal of Accounting and Economics, Vol. 67, No. 2-3, 01.04.2019, p. 387-415.

Research output: Contribution to journalArticle

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