Copycat Skills and Disclosure Costs: Evidence from Peer Companies’ Digital Footprints

Journal of Accounting Research, Forthcoming

54 Pages Posted: 8 Nov 2018 Last revised: 30 Apr 2021

See all articles by Sean Cao

Sean Cao

Georgia State University - J. Mack Robinson College of Business

Kai Du

Pennsylvania State University

Baozhong Yang

Georgia State University - Robinson College of Business

Alan L. Zhang

Florida International University (FIU)

Multiple version iconThere are 2 versions of this paper

Date Written: April 30, 2021

Abstract

We examine whether firms that imitate peer companies’ strategies (copycats) profit from such behavior and how their success may cause competitive harm to disclosing companies. We identify copycat companies by tracking the digital footprints of investment companies that view disclosures on the SEC EDGAR website. We find that copycat companies are able to identify profitable trades that outperform other trades disclosed by the copycatted companies by 5.5% annually. Such stock-screening skills are related to investment sophistication and research intensity. Furthermore, copycats inflict greater damage on the performance of disclosing companies when they possess superior copycat skills, when disclosed trading strategies take longer to complete, and when disclosed stock holdings are characterized by high information asymmetry.

Keywords: Copycat, Disclosure, SEC EDGAR, Hedge Fund, Investment Company, Investment Research, Proprietary Cost, Big Data

JEL Classification: G11, G14, G23

Suggested Citation

Cao, Sean S. and Du, Kai and Yang, Baozhong and Zhang, Alan L., Copycat Skills and Disclosure Costs: Evidence from Peer Companies’ Digital Footprints (April 30, 2021). Journal of Accounting Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3280744 or http://dx.doi.org/10.2139/ssrn.3280744

Sean S. Cao

Georgia State University - J. Mack Robinson College of Business ( email )

P.O. Box 4050
Atlanta, GA 30303-3083
United States

Kai Du

Pennsylvania State University ( email )

University Park, PA 16802
United States

Baozhong Yang (Contact Author)

Georgia State University - Robinson College of Business ( email )

35 Broad Street
Atlanta, GA 30303-3083
United States
404-413-7350 (Phone)
404-413-7312 (Fax)

HOME PAGE: http://sites.google.com/view/baozhongyang/

Alan L. Zhang

Florida International University (FIU) ( email )

University Park
11200 SW 8th Street
Miami, FL 33199
United States

HOME PAGE: http://www.alanlzhang.com

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