Market structure, proprietary benefits, and inter firm information demand

What drives one firm to seek out another firm’s financial information? Inter-firm information demand is likely motivated by economic fundamentals, investments, supply chain relationships, and regulatory compliance, as well as by the potential benefits of obtaining rivals’ proprietary information. However, economic theory makes conflicting predictions on the relation between competitive market structure and the demand for competitor information. In this paper, we employ a direct measure for inter-firm information demand that measures each firm’s downloads of other firms’ mandatory SEC filings from the SEC EDGAR database. The analyses provide evidence that industry concentration, product differentiation, and barriers to entry are positively related to information demand, consistent with the proprietary benefits of information acquisition increasing in these dimensions of market structure. The findings are robust to …