New Entrants and Contract Redaction

Gary Chen; Xiaoli Tian; MiaoMiao Yu

doi:10.1111/jbfa.70028

journal article Open Access Nov 19, 2025

New Entrants and Contract Redaction

Gary Chen

Xiaoli Tian

MiaoMiao Yu

Journal of Business Finance & Accounting Vol. 53 No. 2 pp. 613-645 · Wiley

View at Publisher Save 10.1111/jbfa.70028

Abstract

ABSTRACT
Using the US Census data to capture new entrants, we find that incumbents are more likely to redact proprietary information embedded in material contracts when a greater number of new firms establish their businesses in the focal firm's industry. The effect remains significant when we measure new entrants by the net growth in the number of firms within an industry. Moreover, the effect of new entrants on contract redactions is significantly stronger when the focal firm has greater competition risk, lower dependence on external financing, and fewer foreign subsidiaries. Finally, we identify new entrants based on potential product entries through patents. These alternative aspects of new entrants are also linked to a significant increase in incumbents’ contract redactions. These results indicate that the presence of new entrants intensifies the influence of product market threats on incumbents’ disclosure decisions, leading to increased redaction of proprietary information in contracts.

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Details

Published: Nov 19, 2025
Vol/Issue: 53(2)
Pages: 613-645
License: View

Authors

G

Gary Chen

Driehaus College of Business DePaul University Chicago Illinois USA

X

Xiaoli Tian

McDonough School of Business Georgetown University Washington District of Columbia USA

M

MiaoMiao Yu

Belk College of Business University of North Carolina at Charlotte Charlotte North Carolina USA

Cite This Article

Gary Chen, Xiaoli Tian, MiaoMiao Yu (2025). New Entrants and Contract Redaction. Journal of Business Finance & Accounting, 53(2), 613-645. https://doi.org/10.1111/jbfa.70028

New Entrants and Contract Redaction

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