Download or read book Product Market Competition and Managerial Disclosure of Earnings Forecasts written by Ying Huang and published by . This book was released on 2016 with total page 1 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the effect of product market competition on managerial disclosure of earnings forecasts using large reductions in U.S. import tariff rates to identify an exogenous increase in competition for domestic firms in U.S. product markets. Our difference-in-difference estimations show that tariff reductions are associated with a significant decrease in management forecasts of annual earnings by U.S. domestic firms. Further, this decrease is more pronounced when the tariff rate reduction triggers a greater increase in imports and when the forecasts are likely to incur higher proprietary costs. Our findings are consistent with competition from existing rivals reducing voluntary disclosure through increased proprietary costs.
Download or read book The Effect of Product Market Competition on Mandatory Disclosure Strategy written by Hanyong Chung and published by . This book was released on 2020 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines how product market competition affects firms' mandatory disclosure strategies. Using the information in the SEC comment letters, I observe that firms in a highly competitive market are more likely to file unaudited mandatory disclosures with deficiency. I also find that firms facing higher competition from potential entrants tend to bundle positive (negative) mandatory items with the negative (positive) management earnings forecasts. These findings support my conjecture that firms exercise discretion in the mandatory disclosure through less transparent ways, due to a proprietary cost resulting from market competition. Additional analyses demonstrate a positive economic consequence of such disclosure strategy, and the relationship between market competition and mandatory disclosure strategies is stronger for industry followers than for industry leaders.
Download or read book Market Competition and Earnings Management written by Dalia Marciukaityte and published by . This book was released on 2009 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: We show that product market competition reduces agency problems by curtailing misleading earnings management and improving earnings informativeness. Using the Herfindahl-Hirschman Index from the Census of Manufacturers to proxy for product market competition, we find that firms in more competitive industries are less likely to engage in earnings management as measured by the absolute value of discretionary accruals and they are more likely to engage in earnings smoothing improving earnings informativeness about future cash flows. Earnings smoothing ratios are higher in competitive markets and the positive relation between current discretionary accruals and future changes in operating cash flows is stronger in such markets. Moreover, we find that firms in competitive industries have lower analysts' earnings forecast errors and lower dispersion of earnings forecasts, suggesting lower information asymmetry between managers and the market. Stock-price informativeness is also higher in more competitive markets. Furthermore, forced earnings restatements and security fraud lawsuits are less common in such markets. When firms engage in misleading upward earnings management, in a competitive market they are more harshly punished by the stock market when the market learns about the misleading management. We find that firms engaging in such management experience worse long-term stock performance in competitive markets. In addition, the negative market reaction to the announcements of forced earnings restatements is stronger in competitive markets. Overall, our findings suggest that product market competition is an effective mechanism improving the accuracy of financial reporting and reducing the information asymmetry between managers and the market. Moreover, product market competition achieves more accurate reporting without incurring substantial costs often associated with government regulations of financial reporting or corporate governance.
Download or read book Management Earnings Forecasts written by Hwa Deuk Yi and published by . This book was released on 1994 with total page 236 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Product Market Competition and Earnings Management written by Guifeng Shi and published by . This book was released on 2018 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper, we employ a firm-level measure of product market competition constructed from the textual analysis of firms' 10-K filings and examine the relationship between managerial perceived competition pressure and firms' earnings management. We find that misstatement is positively related to product market competition, which is consistent with the notion that competition pressure increases managerial incentives to manage earnings. We also find that real earnings management is negatively related to product market competition. This suggests that real earnings management involves actions that decrease firms' competitiveness and is costly for firms under high competition pressure.
Download or read book Determinants of the Incidence and Precision of Earnings Forecasts written by Jacob Nelson and published by . This book was released on 2000 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: I investigate two related aspects of corporate disclosure of earnings forecasts. Specifically, I empirically model managers' disclosure decisions as a sequential choice: managers first decide whether to publicly issue an earnings forecast and, if they decide to disclose, they choose the precision with which to make this disclosure. I classify point forecasts as the most precise, and all other forecasts as less precise. I estimate dichotomous choice logistic regressions for each of these decisions. I examine the effect of both capital market and product market considerations on these two aspects of the disclosure decision. Broadly, the analysis suggests that while capital market considerations are the primary determinant of the decision to disclose, product market considerations appear to be important in determining disclosure precision. In particular, disclosure precision appears to be decreasing (increasing) in proprietary costs for good (bad) news firms. This study adds to recent analytical and empirical research on the influence of product market considerations on disclosure decisions.
Download or read book Public Disclosure of Corporate Earnings Forecasts written by Francis A. Lees and published by . This book was released on 1981 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Product Market Competition and Analyst Forecasting Activity written by In-Mu Haw and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In this study, we investigate how product market competition affects the extent of analyst following and the properties of analyst forecasts. Using a broad sample of firms from 37 countries over the 1990 to 2008 period, we find that firms that operate in more concentrated industries and with stronger pricing power are associated with greater analyst following, higher forecast accuracy, and lower forecast dispersion. Moreover, the effect of product market power on analyst following and forecast properties is more pronounced in countries with less effective competition laws and higher entry costs. These findings suggest that high industry concentration and a dominant market position enhance the earnings predictability of firms and lower their information uncertainty, and that country-level institutions that promote competition effectively constrain the power in product markets.
Download or read book Product Market Competition Information and Earnings Management written by Juan Santalo Mediavilla and published by . This book was released on 2011 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Impact of Product Market Competition on Earnings Quality written by Ho-yin Paul Man and published by . This book was released on 2010 with total page 224 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Earnings Guidance and Market Uncertainty written by Jonathan L. Rogers and published by . This book was released on 2011 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the effect of disclosure on uncertainty by examining how management earnings forecasts affect stock market volatility. Using implied volatilities from exchange-traded options prices, we find that management earnings forecasts, on average, increase short-term volatility. This effect is attributable to forecasts that convey bad news, especially when firms release forecasts sporadically (as opposed to on a routine basis). In the longer run, market uncertainty declines after earnings are announced regardless of whether there is a preceding earnings forecast. This decline is mitigated when the firm issues a forecast that conveys negative news.
Download or read book Do Managers Manipulate Gross Profits written by and published by . This book was released on 2016 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Earnings Management written by Joshua Ronen and published by Springer Science & Business Media. This book was released on 2008-08-06 with total page 587 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book is a study of earnings management, aimed at scholars and professionals in accounting, finance, economics, and law. The authors address research questions including: Why are earnings so important that firms feel compelled to manipulate them? What set of circumstances will induce earnings management? How will the interaction among management, boards of directors, investors, employees, suppliers, customers and regulators affect earnings management? How to design empirical research addressing earnings management? What are the limitations and strengths of current empirical models?
Download or read book Why Managers Voluntarily Release Earnings Forecasts written by Doug Yong Shin and published by . This book was released on 1989 with total page 194 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Voluntary Inclusion of Forecasts in the MD A Section of Annual Reports written by Peter Clarkson and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In this study, we appeal to theories advanced by Darrough and Stoughton (1990) to enhance our understanding of why some firms may voluntarily include directional forecasts in their annual reports while others do not. The data are consistent with their predictions that a firm's disclosure policy reflects its concern for both financial market valuation and product market competition. We find that for good news firms, the probability of forecasting is increasing in the financing requirements but decreasing in the threat of competitor entry. The converse holds for "bad news" firms. These results lend further empirical support to the observation that the familiar good news hypothesis tested in the management earnings forecast literature offers only a partial explanation for the decision to forecast. Interestingly, however, even after controlling for financial and product market considerations, an overall voluntary disclosure bias still exists in the data. The data also provide support for the OSC's concern about a voluntary disclosure bias. Only 17.5 percent of our sample forecasts represent revisions downward relative to the previous year's results. However, in contrast to the OSC's concern about a general lack of forward-looking disclosures in annual reports, 35.9 percent of our sample firms include directional forecasts in their MD&A or elsewhere in the annual report.
Download or read book Corporate Payout Policy written by Harry DeAngelo and published by Now Publishers Inc. This book was released on 2009 with total page 215 pages. Available in PDF, EPUB and Kindle. Book excerpt: Corporate Payout Policy synthesizes the academic research on payout policy and explains "how much, when, and how". That is (i) the overall value of payouts over the life of the enterprise, (ii) the time profile of a firm's payouts across periods, and (iii) the form of those payouts. The authors conclude that today's theory does a good job of explaining the general features of corporate payout policies, but some important gaps remain. So while our emphasis is to clarify "what we know" about payout policy, the authors also identify a number of interesting unresolved questions for future research. Corporate Payout Policy discusses potential influences on corporate payout policy including managerial use of payouts to signal future earnings to outside investors, individuals' behavioral biases that lead to sentiment-based demands for distributions, the desire of large block stockholders to maintain corporate control, and personal tax incentives to defer payouts. The authors highlight four important "carry-away" points: the literature's focus on whether repurchases will (or should) drive out dividends is misplaced because it implicitly assumes that a single payout vehicle is optimal; extant empirical evidence is strongly incompatible with the notion that the primary purpose of dividends is to signal managers' views of future earnings to outside investors; over-confidence on the part of managers is potentially a first-order determinant of payout policy because it induces them to over-retain resources to invest in dubious projects and so behavioral biases may, in fact, turn out to be more important than agency costs in explaining why investors pressure firms to accelerate payouts; the influence of controlling stockholders on payout policy --- particularly in non-U.S. firms, where controlling stockholders are common --- is a promising area for future research. Corporate Payout Policy is required reading for both researchers and practitioners interested in understanding this central topic in corporate finance and governance.
Download or read book The Effects of Competition written by George Symeonidis and published by MIT Press. This book was released on 2002-01-18 with total page 558 pages. Available in PDF, EPUB and Kindle. Book excerpt: A theoretical and empirical study of the effects of competition across a broad range of industries. Policies to promote competition are high on the political agenda worldwide. But in a constantly changing marketplace, the effects of more intense competition on firm conduct, market structure, and industry performance are often hard to distinguish. This study combines game-theoretic models with empirical evidence from a "natural experiment" of policy reform. The introduction in the United Kingdom of the 1956 Restrictive Trade Practices Act led to the registration and subsequent abolition of explicit restrictive agreements between firms and the intensification of price competition across a range of manufacturing industries. An equally large number of industries were not affected by the legislation. Using data from before and after the 1956 act, this book compares the two groups of industries to determine the effect of price competition on concentration, firm and plant numbers, profitability, advertising intensity, and innovation. The book avoids two problems common to empirical studies of competition: how to measure the intensity of competition and how to unravel the links between competition and other variables. Because the change in the intensity of competition had an external cause, there is no need to measure the intensity of competition directly, and it is possible to identify one-way causal effects when estimating the impact of competition. The book also examines issues such as the industries in which collusion is more likely to occur; the effect of cartels and cartel laws on market structure and profitability; the links between competition, advertising, and innovation; and the constraints on the exercise of merger and antitrust policies.
