Industry concentration and corporate disclosure policy

- Firms in more concentrated industries tend to disclose less.
- These firms have more opaque information environments.
- The above findings are more pronounced in less financially leveraged industries.
- Proprietary costs of disclosure presumably lead to the study׳s findings.

This study examines the association between U.S. Census industry concentration measures and the informativeness of corporate disclosure policy. We find that in more concentrated industries firms׳ management earnings forecasts are less frequent and have shorter horizons, their disclosure ratings by analysts are lower, and they have more opaque information environments, as measured by the properties of analysts׳ earnings forecasts. Also, when these firms raise funds they prefer private placements, which have minimal SEC-mandated disclosure requirements, over seasoned equity offerings. Overall, our findings suggest that firms in more concentrated industries disclose less and avoid certain financing decisions that have non-trivial disclosure implications, presumably due to proprietary costs of disclosure.