Keywords

information acquisition, information flows, rivalry, investment, M&A

Abstract

Using a novel pairwise measure of firms’ acquisition of rivals’ disclosures, we show that investment opportunities drive interfirm information flows. We find that these flows predict subsequent mergers and acquisitions as well as how and how much firms invest, relative to rivals. Moreover, firms’ use of rivals’ information often hinges on the similarities of their products. Our results suggest that rivals’ public information, far from being unusable, helps facilitate investment and product decisions, including acquisitions and product differentiation strategies. The findings also support a learning mechanism that could partly underlie the emerging literature on peer investment effects.

Original Publication Citation

“Inter-firm Information Flows and Corporate Investment” (with Darren Bernard and Terrence Blackburne). Journal of Financial Economics (2020) 136(2): 760-779.

Document Type

Peer-Reviewed Article

Publication Date

2019

Publisher

Journal of Financial Economics

Language

English

College

Marriott School of Business

Department

Accountancy

University Standing at Time of Publication

Full Professor

Download

Included in

Accounting Commons

Share

COinS