Negative Peer Disclosure

Abstract

This paper provides first evidence of negative peer disclosure (NPD), an emerging corporate strategy to publicize adverse news about industry peers on social media. Consistent with NPDs being implicit positive self-disclosures, disclosing firms experience a two-day abnormal return of 1.6-1.7% over the market and industry. Further exploring the benefits and costs of such disclosures, we find that NPD propensity increases with the degree of product market rivalry and technology proximity and that disclosing firms outperform non-disclosing peers in the product markets in the year following NPD. These results rationalize peer disclosure and extend the scope of the literature beyond self-disclosure.

Keywords: Peer Disclosure, Spillover, Product Market Rivalry, Technology Proximity, Social Media

JEL Classification: G14, L1, M41, O30