Journal article
The spillover effects of MD&A disclosures for real investment: The role of industry competition
Journal of accounting & economics, Vol.70(1), p.101299
08/2020
DOI: 10.1016/j.jacceco.2020.101299
Abstract
We explore whether disclosures in the Management Discussion & Analysis (MD&A) have spillover effects for investment and investment efficiency, and whether spillover effects vary with competition. We focus on the tone of MD&A disclosures and document that the association between a company's investments and the tone of its rivals' MD&A disclosures is positive. Moreover, this association is moderated by competition; it is stronger when firms operate in industries that have lower entry costs, are larger, and have less substitutable products. We obtain similar results for investment efficiency. Overall, our evidence suggests that MD&A disclosures have spillover effects for investment that can improve investment efficiency, and that spillover effects are moderated by industry competition.
•Corporate investment and investment efficiency are associated with the tone of rivals' MD&As.•Firms increase investment when rivals' MD&As are more optimistic.•Firms invest more efficiently when rivals provide more information in MD&As.•The effect of rivals' MD&A tone on investment and investment efficiency is moderated by competition.•Rivals' MD&A tone affects investment more when entry costs are lower, industries larger, and products less substitutable.
Details
- Title: Subtitle
- The spillover effects of MD&A disclosures for real investment: The role of industry competition
- Creators
- Art Durnev - University of IowaClaudine Mangen - Concordia University
- Resource Type
- Journal article
- Publication Details
- Journal of accounting & economics, Vol.70(1), p.101299
- Publisher
- Elsevier B.V
- DOI
- 10.1016/j.jacceco.2020.101299
- ISSN
- 0165-4101
- eISSN
- 1879-1980
- Grant note
- 864-2007-0223 / Social Sciences and Humanities Research Council of Canada (https://doi.org/10.13039/501100000155) RBC Professorship in Responsible Organizations (https://doi.org/10.13039/100012395)
- Language
- English
- Date published
- 08/2020
- Academic Unit
- Finance
- Record Identifier
- 9984380471702771
Metrics
5 Record Views