Abstract

http://ssrn.com/abstract=1696844
 
 

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Industry Concentration and Corporate Disclosure Policy


Ashiq Ali


University of Texas at Dallas - Naveen Jindal School of Management

Sandy Klasa


University of Arizona - Department of Finance

P. Eric Yeung


Cornell University - Samuel Curtis Johnson Graduate School of Management

June 8, 2012


Abstract:     
We examine the effect of industry concentration on the informativeness of corporate disclosure policy. We find that in more concentrated industries, firms’ management earnings forecasts are less frequent and have shorter horizons, their disclosure ratings by analysts are lower, and they have more opaque information environments, as measured by the properties of analysts’ earnings forecasts. Also, when these firms raise funds they prefer private placements, which have minimal SEC-mandated disclosure requirements, over seasoned equity offerings. Likewise, when these firms engage in takeovers they tend to acquire small private targets, enabling them to avoid disclosure of significant details about their acquisitions. Additionally, we document that all our findings are more pronounced for younger industries, where proprietary costs of disclosure are likely to be higher due to greater innovation, but are less pronounced for industries with higher leverage, where rival firms are likely to be constrained in their ability to invest in market share building and would therefore not react aggressively to new information. Overall, our findings suggest that industry concentration impacts firms’ disclosure policy as well as certain financing and investment decisions that have non-trivial disclosure implications.

Number of Pages in PDF File: 47

Keywords: Disclosure Policy, Oligopoly, Industry Concentration

JEL Classification: M41, L13, G29, G32, G34, D82

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Date posted: October 24, 2010 ; Last revised: July 17, 2013

Suggested Citation

Ali, Ashiq and Klasa, Sandy and Yeung, P. Eric, Industry Concentration and Corporate Disclosure Policy (June 8, 2012). Available at SSRN: http://ssrn.com/abstract=1696844 or http://dx.doi.org/10.2139/ssrn.1696844

Contact Information

Ashiq Ali
University of Texas at Dallas - Naveen Jindal School of Management ( email )
800 West Campbell Road, SM41
Richardson, TX 75080-3021
United States
972-883-6360 (Phone)
972-883-6811 (Fax)
HOME PAGE: http://www.utdallas.edu/~axa042200/
Sandy Klasa (Contact Author)
University of Arizona - Department of Finance ( email )
McClelland Hall
P.O. Box 210108
Tucson, AZ 85721-0108
United States
520-621-8761 (Phone)
P. Eric Yeung
Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )
Ithaca, NY 14853
United States
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