The impact of product market competition on earnings quality
Author(s)
Man, Paul Ho Yin
Author(s)
Cheng, P.
Date Issued
2013
Publisher
Wiley
Journal
Accounting & Finance
Volume
53
Issue
1
Start page
137
End page
162
Abstract
The objective of this paper is to examine the impact of product market competition on earnings quality. Based on a sample from the US manufacturing sector for the period 1996–2005, we find consistent evidence showing a positive relation between product market competition and earnings quality. Additional tests also confirm a positive relation between product market competition and the precision of public and private information held by investors and analysts. We also provide evidence that firms competing in concentrated and heterogeneous industries are associated with a number of earnings attributes and information quality not shared by those competing in concentrated but homogeneous industries. These findings are consistent with the intuition that firms enjoying a monopolistic advantage tend to avoid the attention of their competitors and politicians by creating a more opaque information environment.
SFU Affiliated Publication
Yes
Availability at SFU Library
No database links found.