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Trade Secrets Law And Corporate Disclosure: Causal Evidence On The Proprietary Cost Hypothesis, Yinghua Li, Yupeng Lin, Liandong Zhang
Trade Secrets Law And Corporate Disclosure: Causal Evidence On The Proprietary Cost Hypothesis, Yinghua Li, Yupeng Lin, Liandong Zhang
Research Collection School Of Accountancy
This study exploits the staggered adoption of the inevitable disclosure doctrine (IDD) by U.S. state courts as an exogenous shock that generates variations in the proprietary costs of disclosure. We find that firms respond to IDD adoption by reducing the level of disclosure regarding their customers’ identities, supporting the proprietary cost hypothesis. Our results are stronger for firms in industries with a higher degree of entry threats, for firms in more volatile industries, and for firms with a lower degree of external financing dependence. Overall, this study represents one of the first efforts in identifying the causal effect of proprietary …
Short Sellers And Corporate Disclosure, Xia Chen, Qiang Cheng, T. Luo, Heng Yue
Short Sellers And Corporate Disclosure, Xia Chen, Qiang Cheng, T. Luo, Heng Yue
Research Collection School Of Accountancy
We examine how short sellers affect corporate disclosures using a natural experiment. From May2005 to July 2007, the SEC implemented a pilot program by randomly selecting one third ofRussell 3000 stocks and removing the short sale price tests for these stocks (referred to as pilotfirms), leading to lower short-selling constraint, without changing the requirement for other firms(referred to as control firms). We compare the change in corporate disclosures between the pilotfirms and the control firms during this period. We find that compared to the control firms, thepilot firms are more likely to issue good news management forecasts without changing theissuance …