Information Flows Among Rivals and Corporate Investment

56 Pages Posted: 17 Jun 2019

See all articles by Darren Bernard

Darren Bernard

London Business School - Department of Accounting

Terrence Blackburne

Oregon State University

Jacob R. Thornock

Brigham Young University

Date Written: June 7, 2019

Abstract

Using a novel pairwise measure of firms’ acquisition of rivals’ disclosures, we show that investment opportunities drive inter-firm information flows. We find that these flows predict subsequent mergers and acquisitions as well as how and how much firms invest, relative to rivals. Moreover, firms’ use of rivals’ information often hinges on the similarities of their products. Our results suggest that rivals’ public information, far from being unusable, helps facilitate investment and product decisions, including acquisitions and product differentiation strategies. The findings also support a learning mechanism that could partly underlie the emerging literature on peer investment effects.

Keywords: information acquisition, public disclosure, mergers and acquisitions, investment, product markets, peer effects

JEL Classification: D83, G31, G34, M41

Suggested Citation

Bernard, Darren and Blackburne, Terrence and Thornock, Jacob, Information Flows Among Rivals and Corporate Investment (June 7, 2019). Available at SSRN: https://ssrn.com/abstract=3400559 or http://dx.doi.org/10.2139/ssrn.3400559

Darren Bernard (Contact Author)

London Business School - Department of Accounting ( email )

Sussex Place
Regent's Park
London, NW1 4SA
United Kingdom

Terrence Blackburne

Oregon State University ( email )

Corvallis, OR 97331
United States

Jacob Thornock

Brigham Young University ( email )

Provo, UT 84602
United States
8014220828 (Phone)

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