The Effects of Proprietary Information on Corporate Disclosure and Transparency: Evidence from Trade Secrets

69 Pages Posted: 25 Apr 2017 Last revised: 17 Nov 2023

See all articles by Stephen Glaeser

Stephen Glaeser

University of North Carolina (UNC) at Chapel Hill

Date Written: April 1, 2018

Abstract

I examine the effects of proprietary information on corporate transparency and voluntary disclosure. To do so, I develop and validate two measures of firms’ reliance on trade secrecy: one based on 10-K disclosures and one based on subsequent litigation outcomes. I complement these measures by using the staggered passage of the Uniform Trade Secrets Act as a shock to trade secrecy. I find that firms that begin to rely more heavily on trade secrecy substitute increased voluntary disclosure of nonproprietary information for decreased disclosure of proprietary information. The total effect of trade secrecy is a decrease in corporate transparency.

Keywords: proprietary costs, trade secrets, disclosure, information asymmetry, innovation, patents

JEL Classification: D23, G30, O31, O32, O33, O34, O38

Suggested Citation

Glaeser, Stephen, The Effects of Proprietary Information on Corporate Disclosure and Transparency: Evidence from Trade Secrets (April 1, 2018). Journal of Accounting & Economics (JAE), Forthcoming, Available at SSRN: https://ssrn.com/abstract=2957734 or http://dx.doi.org/10.2139/ssrn.2957734

Stephen Glaeser (Contact Author)

University of North Carolina (UNC) at Chapel Hill ( email )

102 Ridge Road
Chapel Hill, NC NC 27514
United States

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