© 2018 Elsevier B.V. This paper analyses a firm's incentives to disclose private information about market demand and its cost when there is a potential market entrant. A partially pooling disclosure equilibrium exists in which high demand-high cost and low demand-high cost types of firms are nontransparent in the case of risky debt issuance. I use a sample of U.S. service firms to test the theoretical predictions. Consistent with the model's implications, among low-debt service firms those that are high demand-high cost are likely to avoid information disclosure, whereas among high-debt firms those that are high demand-high cost and low demand-high cost are less likely to disclose private information.