New Entrants and Redaction

Prof. Miaomiao YU, Assistant Professor, Louisiana State University

Date:      22 March 2023 (Wednesday)
Time:     9:30am – 10:30am
Venue:   Online via Zoom
Host:     Prof. Tingting QUE, Associate Professor in Finance
Zoom Link: https://umac.zoom.us/j/92649853324


Theory predicts that firms will either disclose proprietary information to demonstrate their wiliness to defend aggressively or withhold information to protect themselves against new competitors. Using the U.S. Census data to capture new entrants, we find that incumbents are more likely to redact proprietary information embedded in new material contracts when a greater number of new firms establish their businesses in the focal firm’s industry. This effect is stronger when the focal firm believes there is a high increase in competition, the number of foreign subsidiaries is lower, and the external financing dependence is lower. The effects of new entrants on contract redactions are also robust to the entry of a new product of a public firm and robust to using tariff cuts to capture product entry from foreign countries. Collectively, these findings suggest that threats from new entrants increase incumbents’ incentives to protect proprietary information rather than disclosing the information to signal wiliness to engage in aggressive competition.


Prof. Miaomiao YU is an Assistant Professor of Department of Finance in Louisiana State University and received her PhD in Business Administration (Finance) from the University of Iowa. She has published a series of papers in top finance and accounting journals including the Journal of Financial Economics, Journal of Accounting and Economics, Journal of Financial and Quantitative Analysis. She also obtained the Dean’s Award for Outstanding Research Achievement in 2016.

 All are welcome!