Does informing investors tip off competitors? Evidence from the EDGAR log

Using data from the EDGAR log, we construct a novel metric capturing the intensity of information acquisition about a firm by its competitors relative to investors, who comprise the intended audience for regulatory disclosure. We show that greater information acquisition by rivals, relative to investors, is more pronounced for younger firms, R&D‐intensive firms, and firms in more competitive industries. Firms subject to greater relative information acquisition by rivals invest less, have lower innovation, and suffer financially, both in terms of profitability and valuation. Taken together, these findings are suggestive of a negative externality of mandatory disclosure requirements.