Facilitating Tacit Collusion: A New Perspective on Common Ownership and Voluntary Disclosure

61 Pages Posted: 8 May 2019

See all articles by Andrea Pawliczek

Andrea Pawliczek

University of Missouri at Columbia - School of Accountancy

A. Nicole Skinner

University of Georgia - J.M. Tull School of Accounting

Sarah L. C. Zechman

University of Colorado at Boulder - Leeds School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: May 3, 2019

Abstract

Investors increasingly hold stock in multiple firms that compete in the same product market (“common ownership”), and this ownership structure is positively associated with voluntary disclosure. We posit that common owners want managers to take coordinated anti-competitive actions (i.e., tacitly collude) across commonly owned firms to increase profits. Increased disclosure aids in coordinating and monitoring compliance with such strategies. Results show the common ownership-disclosure relation is diminished when tacit collusion is less feasible (industries with many firms, variable demand, and variable cost structures) and varies in the presence of alternative communication channels (overlapping directors, trade associations). This study broadens our understanding of the forces underlying the positive common ownership-disclosure relation, and expands the economics literature in this area by showing how managers facilitate anti-competitive outcomes in the presence of common ownership.

Keywords: Disclosure, common ownership, horizontal shareholding, tacit collusion

JEL Classification: M41, D22, D43

Suggested Citation

Pawliczek, Andrea and Skinner, Ashley Nicole and Zechman, Sarah L. C., Facilitating Tacit Collusion: A New Perspective on Common Ownership and Voluntary Disclosure (May 3, 2019). Available at SSRN: https://ssrn.com/abstract=3382324 or http://dx.doi.org/10.2139/ssrn.3382324

Andrea Pawliczek

University of Missouri at Columbia - School of Accountancy ( email )

420 Cornell Hall
Columbia, MO 65211
United States

Ashley Nicole Skinner (Contact Author)

University of Georgia - J.M. Tull School of Accounting ( email )

Athens, GA 30602
United States

Sarah L. C. Zechman

University of Colorado at Boulder - Leeds School of Business ( email )

Boulder, CO 80309-0419
United States

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