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Industry Concentration and Corporate Disclosure Policy

62 Pages Posted: 24 Oct 2010 Last revised: 16 May 2014

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

Date Written: May 15, 2014

Abstract

This study examines the association between U.S. Census industry concentration measures and 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. Overall, our findings suggest that firms in more concentrated industries disclose less and avoid certain financing decisions that have non-trivial disclosure implications, presumably due to proprietary costs of disclosure.

Keywords: Disclosure Policy, Oligopoly, Industry Concentration

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

Suggested Citation

Ali, Ashiq and Klasa, Sandy and Yeung, P. Eric, Industry Concentration and Corporate Disclosure Policy (May 15, 2014). Journal of Accounting & Economics (JAE), Forthcoming. Available at SSRN: https://ssrn.com/abstract=1696844 or http://dx.doi.org/10.2139/ssrn.1696844

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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