Please use this identifier to cite or link to this item: http://hdl.handle.net/10125/77044

Do Mandatory Disclosures Affect a Firm’s Decision to Contract with Outside Suppliers?

File Size Format  
HARC-2022 paper 341.pdf 454.07 kB Adobe PDF View/Open

Item Summary

Title:Do Mandatory Disclosures Affect a Firm’s Decision to Contract with Outside Suppliers?
Authors:Lee, Mary
Baek, In Gyun
Keywords:professional service firms
patent disclosure
information leakage
outsourcing
Date Issued:2021
Abstract:This study investigates whether disclosure regulation influences firms’ contracting decisions with outside suppliers. When contracting with outside suppliers that provide value through their knowledge or expertise, we expect that firms will consider the potential cost of leaked proprietary information provided on whether to contract with outsiders on professional services or rely on in-house experts. We use contracts between publicly traded U.S. firms and patent law firms to test our hypothesis, using a quasi-natural experiment that influences the costs of contracting with a patent law firm (i.e., potential information leakage) while holding constant the benefits of the contract (i.e., knowledge gained). As expected, firms that face decreased (increased) potential costs associated with the change in the underlying information environment are more (less) likely to contract with a patent law firm. Further, we find that the change in the propensity to contract with a patent law firm is more (less) pronounced for firms facing weaker (greater) technological competition. Taken together, our evidence supports the notion that changes in the information environment due to changes in disclosure regulation affect firms’ incentives to contract with outside suppliers.
URI:http://hdl.handle.net/10125/77044
Appears in Collections: 04 Managerial (MAN)


Please email libraryada-l@lists.hawaii.edu if you need this content in ADA-compliant format.

Items in ScholarSpace are protected by copyright, with all rights reserved, unless otherwise indicated.