Abstract
This paper examines whether and how existing competitors producing similar products and supplying to common corporate customers (connected peer firms) influence a firm's strategic disclosure of adverse information. Results show that when faced with intense competition from existing competitors, managers tend to withhold disclosing bad news, a finding further supported by three sources of exogenous variation in competition from the connected peer firms. Potential competition from non-connected peers, however, is negatively associated with managerial bad news withholding behavior. Finally, we find that customer-connected peers, customers, and investors play a crucial role in shaping the managerial practice of adverse news disclosure.
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