Negative Peer Disclosure

54 Pages Posted: 2 Jul 2019 Last revised: 23 Nov 2021

See all articles by Sean Cao

Sean Cao

Georgia State University - J. Mack Robinson College of Business

Vivian W. Fang

University of Minnesota - Twin Cities - Carlson School of Management; European Corporate Governance Institute (ECGI)

Lijun (Gillian) Lei

University of North Carolina at Greensboro

Date Written: May 28, 2020

Abstract

This paper provides first evidence of negative peer disclosure (NPD), an emerging corporate strategy to publicize adverse news about industry peers on social media. Consistent with NPDs being implicit positive self-disclosures, disclosing firms experience a two-day abnormal return of 1.6-1.7% over the market and industry. Further exploring the benefits and costs of such disclosures, we find that NPD propensity increases with the degree of product market rivalry and technology proximity and that disclosing firms outperform non-disclosing peers in the product markets in the year following NPD. These results rationalize peer disclosure and extend the scope of the literature beyond self-disclosure.

Keywords: Peer Disclosure, Spillover, Product Market Rivalry, Technology Proximity, Social Media

JEL Classification: G14, L1, M41, O30

Suggested Citation

Cao, Sean S. and Fang, Vivian W. and Lei, Lijun, Negative Peer Disclosure (May 28, 2020). Journal of Financial Economics (JFE), Vol. 140, No. 3, 2021, Available at SSRN: https://ssrn.com/abstract=3413317 or http://dx.doi.org/10.2139/ssrn.3413317

Sean S. Cao

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

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

Vivian W. Fang (Contact Author)

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Lijun Lei

University of North Carolina at Greensboro ( email )

P.O.Box 26170
Greensboro, NC 27412
United States

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