Negative Peer Disclosure

This paper provides evidence of negative peer disclosure (NPD), a trending corporate strategy to publicize adverse news about industry peers on social media. NPD propensity increases with product market rivalry, technology proximity, and information uncertainty. Consistent with firms issuing NPDs to signal quality, they experience an excess return of 1.6-1.7% over the market and industry during a two-day event window and exhibit superior operating performance in the following year. Such signaling suggests that firms are capable of internalizing information spillovers from peer firms’ adverse news. Overall, these results rationalize peer disclosure and broaden the scope of the literature beyond self-disclosure.