Peer effects in corporate disclosure decisions

Seo, Hojun

doi:10.1016/j.jacceco.2020.101364

Cited by 117 publications

(76 citation statements)

References 98 publications

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“…E j G i ; t ½ represents the average disclosure behavior of firm i's peer group. reporting of firms outside the industry (e.g., earning restatement in Kedia, Koh, and Rajgopal [2015] and frequency of management forecasts in Seo [2017]).…”

Section: Rationale Of Learning Mechanismsmentioning

confidence: 99%

Organizational Herding in Advertising Spending Disclosures: Evidence and Mechanisms

Shi¹,

Grewal²,

sridhar³

2021

Journal of Marketing Research

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As firms use advertising to gain product market advantages and increase their valuation in financial markets, disclosing their advertising spending is influential—whether it erodes organizational competitive advantages in product markets or signals quality in financial markets. The authors argue that firms learn from peers’ decisions to reduce the uncertainty in their own advertising disclosure, and they empirically investigate information-based organizational herding in the context of advertising spending disclosure, where a 1994 reporting rule made advertising spending disclosures voluntary in the United States. The authors examine whether a firm relies on information from benchmark leaders or similar peers to resolve disclosure uncertainty. A novel identification strategy, which uses partially overlapping strategic groups, to mitigate simultaneity and correlated unobservables, shows robust evidence for herding effects among peer firms in the same strategic group. Moreover, firms are more likely to resolve disclosure uncertainty from similar peers rather than from benchmark leaders. The authors discuss how firms can use knowledge of competitors’ predicted advertising disclosure decisions conditional on their disclosure to their strategic advantage in product and financial markets.

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Section: Rationale Of Learning Mechanismsmentioning

confidence: 99%

Organizational Herding in Advertising Spending Disclosures: Evidence and Mechanisms

Shi¹,

Grewal²,

sridhar³

2021

Journal of Marketing Research

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“…As such, we are able to provide predictions regarding how firm choices depend on the characteristics of other firms (i.e., variation in firm i's behavior with changes in the characteristics of firm j). This relates to the recent empirical literature on peer effects in capital markets, which typically examine how the actions of firms are influenced by their industry peers (e.g., Leary and Roberts (2014), Kaustia and Rantala (2015), Grennan (2019), Seo (2020)). To the best of our knowledge, peer effects in misreporting has yet to be investigated in the empirical literature.…”

Section: Empirical Implicationsmentioning

confidence: 99%

“…The study of peer effects among firms in capital markets is of recent interest in the empirical literature (e.g., Leary and Roberts (2014), Kaustia and Rantala (2015), Grennan (2019), Seo (2020). Our results predict that firms exhibit greater manipulation in their reports when their industry peers have, on average, less severe information asymmetry between the firm and investors before reports are issued, (ii) less accurate private information; or (iii) lower market inference of reports, such as more complex releases.…”

Section: Introductionmentioning

confidence: 99%

Sequential Reporting Bias

Aghamolla¹,

Guttman²,

Petrov³

2020

SSRN Journal

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“…Adding to this literature, I examine the externality of bank liquidity disclosures. My paper also relates to studies on how strategic interactions and disclosure influence each other (e.g., Bernard, 2016;Darmouni and Sutherland, 2020;Kim, Verdi, and Yost, 2020;Bloomfield, 2020;Noh, 2020;Seo, 2020;Zhang, 2020).…”

Section: Introductionmentioning

confidence: 97%

The Influence of Liquidity Information on Liquidity Holdings in the Banking System

2021

SSRN Journal

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I study how liquidity information influences banks' liquidity holdings, using the disclosure of bank liquidity coverage ratio (LCR) mandated for a group of large US banks. While the disclosure rule aims to increase liquidity in the banking system, I find that non-disclosing banks responded by reducing liquid asset holdings due to the impact of liquidity information on banks' strategic interactions in holding liquidity. I use bank network relationships to measure how much a bank learns from the disclosure, and find that banks learning more cut their liquidity significantly more. In the aggregate, the new disclosure rule lowered liquidity in the banking system, concentrated liquidity within a group of large disclosing banks, and ultimately increased systemic risk. My findings highlight the important, and potentially unanticipated, influence of liquidity information on the liquidity and stability of the banking system. vii

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Peer effects in corporate disclosure decisions

Cited by 117 publications

References 98 publications

Organizational Herding in Advertising Spending Disclosures: Evidence and Mechanisms

Organizational Herding in Advertising Spending Disclosures: Evidence and Mechanisms

Sequential Reporting Bias

The Influence of Liquidity Information on Liquidity Holdings in the Banking System

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