When You Talk, I Remain Silent: Spillover Effects of Peers’ Mandatory Disclosures on Firms’ Voluntary Disclosures

82 Pages Posted: 10 Aug 2016 Last revised: 4 Apr 2019

See all articles by Matthias Breuer

Matthias Breuer

Columbia University

Katharina Hombach

Frankfurt School of Finance & Management gemeinnützige GmbH - Accounting Department

Maximilian A. Müller

WHU - Otto Beisheim School of Management

Date Written: April 2019

Abstract

We predict and find that regulated firms’ mandatory disclosures crowd out unregulated firms’ voluntary disclosures. Consistent with information spillovers from regulated to unregulated firms, we document that unregulated firms reduce their own disclosures in the presence of regulated firms’ disclosures. We further find that unregulated firms reduce their disclosures more the greater the strength of the regulatory information spillovers. Our findings suggest that a substitutive relationship between regulated and unregulated firms’ disclosures attenuates the effect of disclosure regulation on the market-wide information environment.

Keywords: Mandatory disclosure, voluntary disclosure, information spillovers, crowding-out

JEL Classification: M41, M48, G38

Suggested Citation

Breuer, Matthias and Hombach, Katharina and Müller, Maximilian A., When You Talk, I Remain Silent: Spillover Effects of Peers’ Mandatory Disclosures on Firms’ Voluntary Disclosures (April 2019). Available at SSRN: https://ssrn.com/abstract=2820209 or http://dx.doi.org/10.2139/ssrn.2820209

Matthias Breuer

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States

Katharina Hombach (Contact Author)

Frankfurt School of Finance & Management gemeinnützige GmbH - Accounting Department

Adickesallee 32
Frankfurt, 60322
Germany

Maximilian A. Müller

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

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