Redact to protect? Customers' incentive to protect information and suppliers’ disclosure strategies

Gary Chen, Tian, Xiaoli (Shaolee) and Miaomiao Yu

Journal of Accounting and Economics, 2022, vol. 74, issue 1

Abstract: We find that suppliers are more likely to redact mandated disclosures when major customers have proprietary information to protect (in the form of R&D intensity, trade secrets, and nondisclosure agreements), controlling for suppliers' own proprietary cost concerns. Furthermore, the effect on suppliers' redactions is concentrated in subsamples for which customers have greater power, measured by customer size, industry leadership, and the number of suppliers. Additionally, suppliers also curtail operations-related disclosures in the management discussion and analysis (MD&A) and product- and service-related press releases when customers likely have proprietary information to protect. Overall, these findings suggest that dependent suppliers internalize their customers' disclosure incentives and curtail disclosures, catering to customers’ demand for information protection.

Keywords: Supply chain; Customer; Supplier; Disclosure (search for similar items in EconPapers)
JEL-codes: D23 G14 G30 M41 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:74:y:2022:i:1:s0165410122000131

DOI: 10.1016/j.jacceco.2022.101490

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