When You Talk, I Remain Silent: Spillover Effects of Peers’ Mandatory Disclosures on Firms’ Voluntary Disclosures

• In Event: Effects of Mandatory Disclosure

Abstract

We investigate how firms’ disclosure decisions interact. We predict and find that mandating some firms’ disclosures reduces other firms’ voluntary disclosures due to informational spillovers. Consistent with such spillovers, firms reduce their voluntary disclosures more the greater the number of peers from which firms and their stakeholders can learn and hide. These results hold for a number of alternative disclosure measures and our identifying assumptions receive empirical support across several in- and out-of-sample validation tests.

Authors

• Matthias Breuer, University of Chicago

• Katharina Hombach, LMU Munich

• Maximilian A Mueller, WHU-Otto Beisheim School of Management