Negative Peer Disclosure

48 Pages Posted: 2 Jul 2019

See all articles by Sean Cao

Sean Cao

Georgia State University - School of Accountancy

Vivian W. Fang

University of Minnesota - Twin Cities - Department of Accounting

Lijun (Gillian) Lei

University of North Carolina at Greensboro

Date Written: July 1, 2019

Abstract

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

Suggested Citation

Cao, Sean S. and Fang, Vivian W. and Lei, Lijun, Negative Peer Disclosure (July 1, 2019). Available at SSRN: https://ssrn.com/abstract=3413317 or http://dx.doi.org/10.2139/ssrn.3413317

Sean S. Cao

Georgia State University - School of Accountancy ( email )

P.O. Box 4050
Atlanta, GA 30302-4050
United States

Vivian W. Fang (Contact Author)

University of Minnesota - Twin Cities - Department of Accounting ( email )

321 19th Avenue South
Room 3-109
Minneapolis, MN 55455
United States

HOME PAGE: http://www.vivianfang.org

Lijun Lei

University of North Carolina at Greensboro ( email )

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

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