Copycat Skills and Disclosure Costs: Evidence from Peer Companies' Digital Footprints

We examine whether firms that imitate peer companies’ strategies (copycats) profit from such behavior and how their success may cause competitive harm to disclosing companies. We identify copycat companies by tracking the digital footprints of investment companies that view disclosures on the SEC EDGAR Web site. We find that copycat companies are able to identify profitable trades that outperform other trades disclosed by the copycatted companies by 5.5% annually. Such stock-screening skills are related to investment sophistication and research intensity. Furthermore, copycats inflict greater damage on the performance of disclosing companies when they possess superior copycat skills, when disclosed trading strategies take longer to complete, and when disclosed stock holdings are characterized by high information asymmetry.

This is the peer reviewed version of the following article: [Copycat Skills and Disclosure Costs: Evidence from Peer Companies’ Digital Footprints. Journal of Accounting Research (2021)], which has been published in final form at https://doi.org/10.1111/1475-679X.12369. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions: https://authorservices.wiley.com/author-resources/Journal-Authors/licensing/self-archiving.html#3.

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Work Title Copycat Skills and Disclosure Costs: Evidence from Peer Companies' Digital Footprints
Access
Open Access
Creators
  1. SEAN SHUN CAO
  2. KAI DU
  3. BAOZHONG YANG
  4. ALAN L. ZHANG
Keyword
  1. Copycat
  2. Disclosure
  3. SEC EDGAR
  4. Hedge Fund
  5. Investment Company
  6. Investment Research
  7. Proprietary Cost
  8. Big Data
License In Copyright (Rights Reserved)
Work Type Article
Publisher
  1. Wiley
Publication Date June 10, 2021
Publisher Identifier (DOI)
  1. 10.1111/1475-679x.12369
Source
  1. Journal of Accounting Research
Deposited June 17, 2022

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Version 1
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  • Created
  • Added Manuscript 0430 Final-1.pdf
  • Added Creator SEAN SHUN CAO
  • Added Creator KAI DU
  • Added Creator BAOZHONG YANG
  • Added Creator ALAN L. ZHANG
  • Published
  • Updated Work Title, Keyword Show Changes
    Work Title
    • Copycat Skills and Disclosure Costs: Evidence from Peer Companies Digital Footprints
    • ! Copycat Skills and Disclosure Costs: Evidence from Peer Companies' Digital Footprints
    Keyword
    • Copycat, Disclosure, SEC EDGAR, Hedge Fund, Investment Company, Investment Research, Proprietary Cost, Big Data
  • Updated Work Title Show Changes
    Work Title
    • ! Copycat Skills and Disclosure Costs: Evidence from Peer Companies' Digital Footprints
    • Copycat Skills and Disclosure Costs: Evidence from Peer Companies' Digital Footprints
  • Updated