The Spillover Effects of MD&A Disclosures for Real Investment: The Role of Industry Competition

Journal of Accounting and Economics, Forthcoming

77 Pages Posted: 24 Oct 2019

See all articles by Art Durnev

Art Durnev

University of Iowa - Henry B. Tippie College of Business

Claudine Mangen

Concordia University, Montreal - John Molson School of Business

Date Written: October 8, 2019

Abstract

We explore whether disclosures in the Management Discussion & Analysis (MD&A) have spillover effects for investment and investment efficiency, and whether spillover effects vary with competition. We focus on the tone of MD&A disclosures and document that the association between a ompany’s investments and the tone of its rivals’ MD&A disclosures is positive. Moreover, this association is stronger when firms operate in industries that have lower entry costs, are larger, and have less substitutable products. We obtain similar results for investment efficiency. Overall, our evidence suggests that MD&A disclosures have spillover effects for investment that can improve investment efficiency, and that spillover effects are moderated by industry competition.

Keywords: spillover effects, disclosures, competition, investment, investment efficiency

JEL Classification: D43, G31, M4, M4

Suggested Citation

Durnev, Artyom and Mangen, Claudine, The Spillover Effects of MD&A Disclosures for Real Investment: The Role of Industry Competition (October 8, 2019). Journal of Accounting and Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3466469 or http://dx.doi.org/10.2139/ssrn.3466469

Artyom Durnev

University of Iowa - Henry B. Tippie College of Business ( email )

12348 DEWHURST AVE
HENRICO, VA Henrico 23233-7848
United States
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Claudine Mangen (Contact Author)

Concordia University, Montreal - John Molson School of Business ( email )

1450 Guy Street
Montreal, Quebec H3H 0A1
Canada
+ 1(514) 848 24 24 2747 (Phone)
+1 (514) 848 45 18 (Fax)

HOME PAGE: http://claudinemangen.com/

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