Capital Structure and Product Market Competition Advantage: The Empirical Evidence from Chinese State-Controlled and Private Listed Companies

2010 ◽  
Author(s):  
Tan Duojiao
Keyword(s):  
Capital Structure ◽  
Empirical Evidence ◽  
Market Competition ◽  
Product Market ◽  
Listed Companies ◽  
Product Market Competition ◽  
Competition Advantage ◽  
Chinese State

MARKET COMPETITION, ARBITRAGE RISK, AND CAPITAL STRUCTURE: EVIDENCE FROM TAIWAN

2016 ◽  
Vol 11 (01) ◽  
pp. 1650002 ◽  
Author(s):  
YU-EN LIN ◽  
HSIANG-HSUAN CHIH ◽  
CHIA-HSIN CHENG ◽  
YAN-QING KU
Keyword(s):  
Capital Structure ◽  
Agency Costs ◽  
Market Competition ◽  
Risk Preference ◽  
Product Market ◽  
Listed Companies ◽  
Idiosyncratic Risk ◽  
Product Market Competition ◽  
Risk Averse ◽  
Arbitrage Risk

The purpose of this paper is to understand how the product market competition and the arbitrage risk affects managers’ decisions on capital structure. To find managers’ risk preference, we introduce the interaction between market competition and the arbitrage risk of the firm. Sampling from Taiwanese listed companies from 1986 to 2011, we identify both the market competition and the arbitrage risk affects managers’ debt decisions. In addition, we find that most managers in monopolistic firms increase debt to decrease the agency costs. However, some hold risk-averse motivation to enjoy their “quiet life”. These “quiet life” managers exist in those companies that are in non-competitive markets and that exists large idiosyncratic risk.

The impact of product market competition on stock price crash risk

2020 ◽  
Vol 35 (7) ◽  
pp. 1141-1153
Author(s):  
Jia Li ◽  
Zhengying Luo
Keyword(s):  
Stock Price ◽  
Market Competition ◽  
Product Market ◽  
Listed Companies ◽  
Product Market Competition ◽  
Crash Risk ◽  
Competitive Position ◽  
Content Type ◽  
Industry Competition ◽  
The Impact

Purpose The purpose of this paper is to explore the impact of product market competition on the risk of stock price crash based on the degree of industry competition and the competitive position of enterprises. Design/methodology/approach This paper chooses the data of Shanghai and Shenzhen A-share listed companies from 2009 to 2017 as samples and uses a threshold regression model to explore the impact of product market competition on the risk of a stock price crash. Findings The results show that: the overall level of industry competition is negatively correlated with the risk of stock price crash; the competitive position of enterprises and the risk of a stock price crash. The correlation is not significant: for high competitive enterprises, the degree of industry competition is negatively correlated with the risk of stock price crash; for low competitive enterprises, the degree of industry competition is positively correlated with the risk of a stock price crash and the conclusions obtained have passed the robustness test. Originality/value This paper not only enriches the literature on the relationship between product market competition and the risk of stock price crash but also has reference significance for supervisors to allocate resources to supervise information disclosure of listed companies.

The nexus between product market competition and the quality of analysts’ forecasts: empirical evidence from Chinese-listed firms

2020 ◽  
Vol 14 (1) ◽  
pp. 15-30
Author(s):  
Amjad Iqbal ◽  
Khalil Jebran ◽  
Muhammad Umar
Keyword(s):  
Empirical Evidence ◽  
Market Competition ◽  
Positive Association ◽  
Product Market ◽  
State Ownership ◽  
Product Market Competition ◽  
Future Research ◽  
Manufacturing Companies ◽  
Content Type

Purpose This study aims to explore the relationship between product market competition (competition hereafter) and the quality of analysts’ forecasts. Design/methodology/approach This study uses industry-level (i.e. Herfindahl–Hirschman index), as well as firm-level (i.e. Lerner index) measures of competition and uses forecast accuracy and forecasts dispersion as proxies for analysts’ forecast quality. Further, this study considers a sample of Chinese-listed manufacturing companies for the period spanning 2005 to 2016 and uses various estimation techniques to empirically test the hypothesized relationship. Findings The results show that firms in highly competitive industries are characterized by greater accuracy and smaller dispersion in forecasts. Further, this positive association is more pronounced in SOEs as compared to NSOEs, and in industries characterized by intense competition. The sensitivity analysis further endorses the main results. Practical implications Presenting theoretical and empirical evidence, this study suggests that regulatory bodies should take steps to promote the competitive environment in China. This can help financial analysts in developing more accurate and reliable forecasts and ultimately can bring informational efficiency to the market. Finally, investors would be able to perform their business valuation process in a better way and make economic-useful decisions regarding their capital resource allocation. Originality/value The contribution of the current research is threefold: first, it adds to the limited literature available on this specific topic; second, this study examines the issue in China and further single out the influence of state-ownership and intensity of competition on the relation between competition and forecast properties; and third, this study provides theoretical arguments for the positive association between competition and forecasts quality while setting directions for future research on the topic and suggests the potential channels such as the reporting quality channel and the information disclosure channel that need to be explored further, to better understand the mechanism where competition influences the quality of analysts’ forecasts.

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