Calling for Transparency: Evidence from a Field Experiment

56 Pages Posted: 27 Jan 2023 Last revised: 15 May 2023

See all articles by T.J. Wong

T.J. Wong

University of Sothern California

Gwen Yu

University of Michigan

Shubo Zhang

Shanghai Jiao Tong University

Tianyu Zhang

The Chinese University of Hong Kong (CUHK)

Date Written: January 26, 2023

Abstract

We examine how firms respond to requests for enhanced disclosure that we make on an online investor platform. Exploiting variation in firms’ customer and supplier disclosures, we ask a randomized set of non-disclosing firms to provide information on their customers’ and suppliers’ identities. We find that the firms’ probability of disclosure depends on the basis we give for the demand—requests appealing to disclosure’s usefulness to investors lead to more frequent disclosure, while those appealing to regulators’ preference for disclosure lead to less frequent disclosure. The requests we make on the platform lead to more frequent customer- and supplier-related inquiries from other platform users. We also find that the treatment firms’ disclosure of customer and supplier information improves in the next period’s regulatory filings. The findings suggest that investor platforms can enhance corporate transparency by increasing retail investors’ ability to demand information.

Keywords: Investor Online Platforms, Retail investors, Disclosure, Customer and supplier information, Proprietary costs

JEL Classification: G00, M40, M41

Suggested Citation

Wong, T.J. and Yu, Gwen and Zhang, Shubo and Zhang, Tianyu, Calling for Transparency: Evidence from a Field Experiment (January 26, 2023). Journal of Accounting & Economics (JAE), Forthcoming, Available at SSRN: https://ssrn.com/abstract=4338061 or http://dx.doi.org/10.2139/ssrn.4338061

T.J. Wong

University of Sothern California ( email )

701 Exposition Blvd
Los Angeles, CA California 90089
United States

Gwen Yu (Contact Author)

University of Michigan ( email )

701 Tappan Street
R3350
Ann Arbor, MI MI 48109
United States
7347635934 (Phone)

Shubo Zhang

Shanghai Jiao Tong University ( email )

1954 Huashan Road
Shanghai, Shanghai 200030
China
+86 (0)21 62932586 (Phone)

Tianyu Zhang

The Chinese University of Hong Kong (CUHK) ( email )

Shatin, N.T.
Hong Kong
Hong Kong

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