Trade Secrets Law and Corporate Disclosure

Causal Evidence on the Proprietary Cost Hypothesis

Yinghua Li, Yupeng Lin, Liandong Zhang

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

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 costs of disclosure on the supply of disclosure.

Original languageEnglish (US)
JournalJournal of Accounting Research
DOIs
StateAccepted/In press - Jan 1 2017

Fingerprint

Disclosure
Trade secrets
Proprietary costs
Corporate disclosure
Industry
External financing
Exogenous shocks
U.S. States
Causal effect
Threat

Keywords

  • Corporate disclosure
  • Customer identity
  • Inevitable disclosure doctrine
  • Proprietary costs
  • Trade secrets law

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

Cite this

Trade Secrets Law and Corporate Disclosure : Causal Evidence on the Proprietary Cost Hypothesis. / Li, Yinghua; Lin, Yupeng; Zhang, Liandong.

In: Journal of Accounting Research, 01.01.2017.

Research output: Contribution to journalArticle

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