Disclosure incentives when competing firms have common ownership

Board directors with foreign experience and stock price crash risk: Evidence from China

“…Accordingly, we adopt two measures as the proxies of the voluntary disclosure behaviour: MEF_Dummy , a dummy variable which equals 1 if a firm voluntarily discloses management earnings forecasts in a year and 0 otherwise; and MEF_Frequency , the number of voluntary earnings forecasts in a year. We control for several factors that have been shown to affect corporate disclosure behaviour in prior studies (e.g., Park, Sani, Shroff, & White, ): reporting a loss ( Loss ), auditor type ( Big4 ), financial analysts ( Analysts ), increases in earnings ( Earnings_Dummy ), firm size ( Size ), market‐to‐book ratio ( MB ), leverage ( Lev ), return on assets ( ROA ), sales growth ( Growth ), and the standard deviation of net profit ( Std. Earnings ).…”

The Effect of Common Ownership on Investment Decisions under Uncertainty.

“…As a robustness test, we consider an alternative measure of common ownership. Our main analysis follows the approach of He and Huang (2017) and Park et al (2019), assuming that all institutional investors are fully informed about the externalities that firms impose on each other. As an alternative proxy, we follow Gilje et al (2019) and assume that asset managers with more diversified holdings are not as equally attentive to firm-specific actions as those with less diversified holdings.…”

“…We use a sample of 64,191 U.S. public firm-year observations from 1980 to 2016 to test our predictions. Following He and Huang (2017) and Park et al (2019), we define firm-year observations with a common owner if an investor owns at least five percent equity in more than one firm in the same four-digit SIC industry at a given point in time. 1 Our measure of uncertainty is expected industry volatility, which we estimate with a generalized autoregressive conditional heteroskedasticity (GARCH) model that captures the volatility faced by the firm's industry (Eisdorfer 2008).…”

“…To alleviate endogeneity concerns that unobservable variables are correlated with both common ownership and investment we examine plausibly exogenous shocks to common ownership. We follow prior literature and use financial institution mergers to generate plausibly exogenous variation in common ownership (He and Huang 2017;Park et al 2019). Our identifying assumption uses firms experiencing an increase in common ownership due to financial institution mergers as a quasi-exogenous shock to common ownership while other firms in the same industry that do not experience changes in common ownership as a control group.…”

The Effect of Peer Group Overlap in Executives’ RPE Contracts on Competitive Aggressiveness

“…Finally, in studying the effect of peer group overlap on firms' competitive aggressiveness, we combine insights from accounting and strategic management. While competitive actions trigger many accounting-related issues, such as earnings management (e.g., Burgstahler and Dichev, 1997;Roychowdhury, 2006) and disclosure (e.g., Ali, Klasa, Yeung, 2014;Glaeser, 2018;Park, Sani, Shroff and White, 2019), the accounting literature has largely ignored the effect of accountingrelated choices on such actions. Given that competitive aggressiveness is an established and validated construct (see, e.g., Ferrier, 2001;Ferrier and Lyon, 2004;Ferrier et al, 1999;Nadkarni et al, 2016;Ndofor et al, 2011), this construct provides amply opportunity for future accounting research.…”