Abstract
Exploiting a novel measure of proprietary information disclosure, this study shows that firms respond to their peer firms’ disclosure of proprietary information. I find that firms increase their voluntary disclosures and their liquidity improves in response to a peer firm's disclosure of proprietary information. I provide evidence that a peer's disclosure crowds in the focal firm's qualitative and quantitative disclosures by decreasing the focal firm's proprietary costs. I also show that the focal firm’s disclosure shifts from including negative tone words to relatively more positive tone words. These effects are not easily attributable to investors’ pressure, earnings management practices, and analysts’ information production. Ultimately, this study highlights that a firm's voluntary disclosure decision is a function of a peer’s disclosure of proprietary information.