Suppliers' Product Market Competition, Customer Concentration, and Cost Structure

2020 ◽  
Author(s):  
Hsihui Chang ◽  
Curtis M. Hall ◽  
Michael T. Paz
Keyword(s):  
Market Competition ◽  
Product Market ◽  
Downside Risk ◽  
Manufacturing Firms ◽  
Cost Structure ◽  
Product Market Competition ◽  
Cost Data ◽  
Fixed Costs ◽  
Trade Off ◽  
The Relationship

We examine how suppliers' product market competition influences the relation between customer concentration and cost structure. Analyzing cost data from a sample of manufacturing firms, we find that suppliers exhibit more rigid cost structure when both product market competition and customer concentration are high. In further analysis, we find that the effect of competition on the relationship between customer concentration and cost structure is isolated to the COGS and COGM. Our results suggest that suppliers trade off the downside risk of having fixed costs that cannot be reassigned with the potential upside benefit of meeting major customer demands.

Help or resistance? Product market competition and water information disclosure: evidence from China

2019 ◽  
Vol 11 (5) ◽  
pp. 933-962
Author(s):  
Zhifang Zhou ◽  
Tao Zhang ◽  
Jiachun Chen ◽  
Huixiang Zeng ◽  
Xiaohong Chen
Keyword(s):  
Information Disclosure ◽  
Market Competition ◽  
Product Market ◽  
Product Market Competition ◽  
Competition Intensity ◽  
Ownership Type ◽  
Content Type ◽  
Industry Competition ◽  
The Government ◽  
The Relationship

Purpose This paper investigates the relationship between product market competition and firms’ water information disclosure and how firms’ ownership type can affect this relationship in China, offering new insights into corporate water management. Design/methodology/approach The authors investigated 303 Chinese listed companies in highly water-sensitive industries to examine how product market competition influences corporate water information disclosure by subdividing the product market competition into market competition at the firm level and the industry competition intensity at the industry level. Findings The results show that there exists an inverted U-shaped relationship between industry competition and water information disclosure; enterprises with the highest market power in a mildly competitive industry are more willing to voluntarily disclose water information and play an industry benchmarking role. Further tests demonstrate that the relationship between industry competition intensity and water information disclosure is stronger for state-owned enterprises than for private enterprises. Research limitations/implications The current water resources regulations in China are relatively lax and the water risk awareness of firms is weak, which may affect the applicability of the results. In addition, water information disclosure research is a relatively new field and a quantitative index system for water information disclosure is still in the exploratory stage. Further developments, including the selection, definition and measuring methods of a water index are required. Practical implications The authors developed a new direction of enterprise water management activities from the perspective of market competition. Based on the market conditions in China, the authors also investigated the impact of the ownership type of the enterprises on the relationship between market competition and water information disclosure. Social implications The authors suggested that the government should improve laws and regulations and adopt incentive mechanisms to encourage enterprises to implement water resource management. In addition, the government should encourage high market status enterprises to actively fulfill their environmental responsibilities so that the entire industry is encouraged to follow suit. Originality/value This study represents an important development in the field of environmental accounting and is the first research on corporate water information disclosure; it also extends the research on the influence mechanisms of market competition on the environmental management practices of enterprises.

scholarly journals The moderating effect of corporate governance to the relationship of corporate social responsibility and product market competition to company value

2021 ◽  
Vol 24 ◽  
pp. 317-323
Author(s):  
Elyzabet Indrawati Marpaung ◽  
Yvonne Augustine
Keyword(s):  
Corporate Governance ◽  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Market Competition ◽  
Product Market ◽  
Product Market Competition ◽  
Company Value ◽  
Corporate Social ◽  
Relationship Of ◽  
The Relationship

The objective of this research is to find out the moderating effect of corporate governance on the relationship of corporate social responsibility and product market competition to company value. The control variable in this study is company size. The sample of this study was 216 observations consisting of 54 manufacturing companies listed in the Indonesia Stock Exchange from 2016 until 2019. Moreover, the simple random sampling method is employed to grab them. To analyze the data, we use the multiple regression model with polling data. The findings of this research are product market competition negatively affects company value. In opposition, corporate social responsibility and  corporate governance positively affect company value. Meanwhile, corporate governance only moderates the effect of product market competition on the company value. The implication of this study is that good corporate governance practices can reduce the negative effects of PMC on company value.    

The Relationship between Product Market Competition and Corporate Earnings Quality

2017 ◽  
Vol 13 (4) ◽  
pp. 501-522
Author(s):  
Min-Shik Shin ◽  
◽  
Jae-Ik Lee ◽  
Qian You ◽  
◽  
...  
Keyword(s):  
Earnings Quality ◽  
Market Competition ◽  
Product Market ◽  
Product Market Competition ◽  
Corporate Earnings ◽  
The Relationship

Competition and exposure of returns to the C-CAPM

2018 ◽  
Vol 35 (4) ◽  
pp. 525-541
Author(s):  
Hussein Abdoh ◽  
Oscar Varela
Keyword(s):  
Market Competition ◽  
Systematic Risk ◽  
Product Market ◽  
Product Market Competition ◽  
Content Type ◽  
Capm Beta ◽  
The Relationship ◽  
Consumption Fluctuations ◽  
Tariff Reductions

Purpose This study aims to investigate the effect of product market competition on the exposure of firms’ returns to consumption fluctuations (C-CAPM beta). Design/methodology/approach The C-CAPM beta comes from a regression of a stock’s returns against consumption growth, with controls for the Fama–French three factors and momentum. The Herfindahl–Hirschman index of concentration measures competition, with other measures like deregulation and tariff reductions used for robustness tests. Industries are categorized using different SIC digits, with the NAICS measure used for robustness tests. The C-CAPM beta is regressed to competition, with appropriate control variables, to find its relationship. Findings Higher levels of competition reduces the C-CAPM beta. The results are consistently robust to different measures of product market competition and industry identification. Practical implications Product market competition influences the sensitivity of systematic risk, as measured by the C-CAPM beta, to consumption, such that higher levels of competition reduce systematic risk. Originality/value This research contributes to a literature that admittedly is still murky, as the relationship between competition and systematic risk is still unsettled. No study (to the authors’ knowledge) examines the effect of competition on firms’ exposure to consumption. This research adds to the literature on the role of competition in risk, specifically with respect to consumption.

Size-Competition-Productivity Nexus: Evidence from Indian Manufacturing Firms

2019 ◽  
Vol 20 (2) ◽  
pp. 303-321
Author(s):  
Lopamudra D. Satpathy ◽  
Bikash Ranjan Mishra
Keyword(s):  
Firm Size ◽  
Market Competition ◽  
Value Added ◽  
Product Market ◽  
Manufacturing Firms ◽  
Product Market Competition ◽  
Causality Test ◽  
Firm Level ◽  
Panel Ardl ◽  
Long Run

Over the years, researches have witnessed incongruence nature and direction of relationship among product market competition and firm size with the growth of firms’ productivity across the globe. Considering these gaps, this study aims to establish both short- and long-run relationships among these three characteristics of Indian manufacturing firms and intends to find their directions of causalities. This study uses firm-level data over a period of 1998–1999 to 2012–2013. Using Panel ARDL-PMG method, the results reveal the existence of a long-run association among product market competition, firm size and productivity growth for the full sample and for subsamples, categorizing relatively efficient and inefficient firms, and innovative and non-innovative firms. From the panel VECM Granger causality test, it has been observed that there is the long-run feedback relationship among these three variables. The empirical evidence suggests that as the intensity of competition becomes stronger and the firm-specific capabilities expand, they impart improved productivity via within and between firm effects. This draws some major implications for policymakers to embrace more competitive prone policies along with encouragement to firm specificities to realise value-added productivity. JEL: C33, D24, L11, L60

The Relationship Between Competition and the Fraction of Firms Using Stock-Based Compensation in an Industry

2014 ◽  
Vol 17 (01) ◽  
pp. 1450006
Author(s):  
Hsing-Hua Huang ◽  
Chia-Fan Lin
Keyword(s):  
Empirical Evidence ◽  
Risk Taking ◽  
Market Competition ◽  
Negative Relationship ◽  
Product Market ◽  
Product Market Competition ◽  
Competitive Industry ◽  
Risk Taking Behavior ◽  
The Relationship

This paper theoretically and empirically investigates the relationship between the intensity of product market competition and the fraction of firms that use stock-based compensation in an industry. By employing the relationship between a firm's risk-taking behavior and the use of stock-based compensation, we theoretically show that when the fraction of firms using stock-based compensation is less (more) than one-half, there is a positive (negative) relationship between the fraction and the intensity of product market competition and further provide some supportive empirical evidence. Our results imply that there is more heterogeneity in firms' stock-based compensation policies in the more competitive industry.

Sign in / Sign up

Export Citation Format

Share Document