Peer Effects in Corporate Disclosure Decisions

72 Pages Posted: 2 May 2016 Last revised: 29 Oct 2020

Date Written: October 14, 2020

Abstract

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.

Keywords: Peer effects, Disclosure, Management Forecast, 8-K Flings, and Press Releases

JEL Classification: M40, M41

Suggested Citation

Seo, Hojun, Peer Effects in Corporate Disclosure Decisions (October 14, 2020). Journal of Accounting & Economics (JAE), Forthcoming, Available at SSRN: https://ssrn.com/abstract=2773675 or http://dx.doi.org/10.2139/ssrn.2773675

Hojun Seo (Contact Author)

Purdue University ( email )

403 W State St
West Lafayette, IN 47907
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
1,055
Abstract Views
3,757
Rank
38,736
PlumX Metrics