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
Date Written: October 8, 2019
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: Suggested Citation