Merchant Guild Culture and MD&A Disclosure Quality: Transparency versus Reticence

This research investigate how merchant guild culture (MGC) rooted in imperial China continues to shape the disclosure practices in contemporary firms. Drawing on a set of competing theoretical hypotheses, we find that firms more deeply embedded in MGC tend to disclose MD&A reports of lower informational quality, as evidenced by higher year-to-year (vertical) textual similarity. We further explore cross-sectional tests, moderating effects, and the capital market’s response to such disclosure practices. Our evidence suggests that boilerplate MD&A disclosure represents a deliberate, strategic response by managers to mitigate competitive risks and safeguard stakeholder interests, rather than a manifestation of opportunistic concealment.