Negative Peer Disclosure
48 Pages Posted: 2 Jul 2019
Date Written: July 1, 2019
This paper provides evidence of negative peer disclosure, an emerging corporate strategy to publicize adverse news about industry peers on social media. Its propensity increases with product market rivalry, technology proximity, and information uncertainty. Consistent with firms issuing negative peer disclosures to signal quality, they experience an excess return of 1.6-1.7% over the market and industry during a two-day event window and exhibit superior operating performance in the following year. Such signaling suggests that firms are capable of internalizing information spillovers from peer firms’ adverse news. Overall, these results rationalize peer disclosure and broaden the scope of literature beyond self-disclosure.
Keywords: Disclosure, Information Spillover, Product Market Rivalry, Technology Closeness, Information Uncertainty, Signaling, Social Media, Twitter
JEL Classification: D80, G14, L1, M31, M41, O30
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