Public Disclosures in the Presence of Suppliers and Competitors

Firms' reluctance at times to publicly disclose financial information is often attributed to concern that the information may be used against them by self-interested outside parties. These outside parties may interact with the firm in the horizontal realm (e.g., retail competitors) or in the vertical arena (e.g., wholesale suppliers). This paper is built on the premise that fully understanding the strategic consequences of disclosure requires one to jointly consider horizontal and vertical relationships. When both rivals and suppliers are accounted for, we identify a consistent message – lower intra-industry correlation in product demand favors disclosure. Unlike disclosure determinants derived in previous work primarily considering supply markets or retail markets alone, this result is shown to be robust to modeling variations.