An Empirical Demand – Supply Model of Proprietary Financial Information

Posted: 23 Aug 2019

See all articles by Robin Litjens

Robin Litjens

Tilburg University - CentER and Department of Accountancy

Jeroen Suijs

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Date Written: August 21, 2019

Abstract

This paper analyses supply of and demand for financial information in a setting where proprietary cost seems the primary driver for a firm’s public disclosure decision. The empirical setting is mandatory public disclosure of annual reports by private firms in the Netherlands. As these firms have to file their annual report with the Dutch Chamber of Commerce within thirteen months after fiscal year end, the filing delay serves as a proxy for the firm’s unwillingness to disclose. We measure demand for information on the basis of the timeliness that annual reports are requested by users. Proprietary cost at firm level varies whether a firm has to file a profit and loss account and whether firms have above industry median profitability. Our findings are in line with our hypotheses, i.e., supply and demand for information are correlated: the higher the unwillingness of firms to disclose annual report information, the higher the demand for this information is. The main findings are supported by difference-in-difference tests, exogenous legislative changes, alternative measures of demand and supply, and additional tests on propensity score matching. Overall, our study highlights proprietary cost as an important determinant of the timing of public disclosure and subsequent demand.

Keywords: Proprietary Information, Information Acquisition, Private Firms

JEL Classification: D4, D80, G14, L1, M4

Suggested Citation

Litjens, Robin and Suijs, Jeroen, An Empirical Demand – Supply Model of Proprietary Financial Information (August 21, 2019). Available at SSRN: https://ssrn.com/abstract=3440523

Robin Litjens (Contact Author)

Tilburg University - CentER and Department of Accountancy ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Jeroen Suijs

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

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