The impact of product market competition on earnings quality

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

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Detail(s)

Original languageEnglish
Pages (from-to)137-162
Journal / PublicationAccounting and Finance
Volume53
Issue number1
Publication statusPublished - Mar 2013

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. © 2011 The Authors. Accounting and Finance © 2011 AFAANZ.

Research Area(s)

  • Earnings quality, Industry concentration, Product market competition

Citation Format(s)

The impact of product market competition on earnings quality. / Cheng, Peter; Man, Paul; Yi, Cheong H.

In: Accounting and Finance, Vol. 53, No. 1, 03.2013, p. 137-162.

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review