Author: Chung-Shin LiuPublisher:
ISBN:
Category :
Languages : en
Pages : 0
Book Description
The impact of product market competition on expected returns
Author: Chung-Shin LiuProduct Market Competition and Industry Returns
Author: Maria Cecilia BustamantePublisher:
ISBN:
Category :
Languages : en
Pages : 68
Book Description
This paper studies how expected returns interact with product market competition. The model predicts that (i) competition erodes markups, such that firms are more exposed to systematic risk; (ii) the threat of entry by new firms lowers exposure to systematic risk of incumbents; and (iii) higher industry aggregate risk represents a barrier to entry, such that riskier industries become less competitive. We provide empirical evidence consistent with these three channels and for an overall negative relation between returns and competition. We also consider a sample selection correction for publicly listed firms and use it to construct an alternative concentration measure.
Product Market Competition and the Profitability Premium
Author: Yao DengPublisher:
ISBN:
Category :
Languages : en
Pages : 62
Book Description
This paper studies the impact of product market competition on the well-documented positive relation between firms' current profitability and future stock returns. I find that this relation is robust only in competitive industries. A long-short portfolio sorted on profitability earns an average monthly return of 1.1% in competitive industries and only 0.14% in concentrated industries. Firms' differential exposure to investment-specific technology shocks explains this gap. To understand this result, I build a production-based model with imperfect competition. Market power reduces a firm's investment response to these shocks and thus lowers risk exposure. Empirical tests confirm the model's predictions.
Product Market Competition and the Impact of Price Uncertainty on Investment
Author: Vivek GhosalPublisher:
ISBN:
Category : Capital investments
Languages : en
Pages : 28
Book Description
Dynamic Competition and Expected Returns
Author: Ilona BabenkoPublisher:
ISBN:
Category :
Languages : en
Pages : 56
Book Description
We build a dynamic model that highlights two separate effects of product market competition on factor betas. Within an industry, competition increases dynamically with the underlying demand and is responsible for an inverse U-shaped relation between systematic risk and profitability. Conditional on profitability, industries with lower adjustment costs are more competitive and less risky. Our empirical approach exploits changes in oil prices to capture the dynamic effect in the oil sector and uses a measure of trade flows between economic sectors to capture the cross-industry effect. Our methodology improves on previous studies that use one-dimensional proxies such as industry concentration to measure competition.
Strategic IPOs and Product Market Competition
Author: Jiri ChodPublisher:
ISBN:
Category :
Languages : en
Pages : 37
Book Description
We examine firms' incentives to go public in the presence of product market competition. As a result of their greater ability to diversify idiosyncratic risk in the capital market, public firms' owners tolerate higher profit variability than owners of private firms. Consequently, public firms adopt riskier and more aggressive output market strategies than private firms, which improves the competitive position of the former vis-agrave;-vis the latter. This strategic benefit of being public, and thus, the proportion of public rms in an industry are shown to be positively related to the degree of competitive interaction among firms in the output market, to demand uncertainty, and to the idiosyncratic portion of this uncertainty. Additional empirical predictions concern the effect of a firm's initial public ocurren;ering on its market share and on its rivals' valuations, as well as the effects of product market competition on expected returns to public and private equity and on the timing of going public and private.
The Modern Corporation and Private Property
Author: Adolf Augustus BerlePublisher:
ISBN:
Category : Corporation law
Languages : en
Pages : 396
Book Description
Product Market Competition and Industry Returns
Author: Maria Cecilia BustamantePublisher:
ISBN:
Category :
Languages : en
Pages : 65
Book Description
Product Market Competition and Industry Returns
Author: Maria Cecilia BustamantePublisher:
ISBN:
Category : Competition
Languages : en
Pages : 0
Book Description
The Impact of Product Market Competition on Earnings Quality
Author: Ho-yin Paul ManPublisher:
ISBN:
Category : Corporation profits
Languages : en
Pages : 224
Book Description