The Impact of Existing and Potential Competition of Product Market on Disclosure Quality of Companies Listed on Tehran Stock Exchange Using Factor Analysis on Competition Variables

Authors

shahid chamran university

Abstract

This study investigated the relationship between product market competition and disclosure quality of 131 companies listed on Tehran stock exchange within 17 industries and during the period of 2007-2013. First, in order to assess the market more accurately, eight common competition indicators were used. Then using factor analysis technique, these indicators were summarized into three factors: potential competition, existing competition and industry profitability. Finally, the research hypotheses were tested using panel data with fixed effects. Results suggest that there is a significant positive relationship between potential competition and disclosure quality, while the relationship between existing competition and disclosure quality is significant and negative. In other words, the level of disclosure quality regarding these two dimensions of competition was determined. This means that if potential competition is stronger than existing competition, companies are forced to disclose reliable and timely information. Meanwhile, if existing competition is stronger than their potential competition, it is not essential for companies to disclose the reliable and timely information. Therefore, the tendency to increase the level of disclosure quality in these companies is low.

Keywords

References

-    اعتمادی، حسین و دیگران. (1391). «افشا و ارزش شرکت: شواهدی از بازار سرمایۀ نوظهور ایران». حسابداری مدیریت، سال پنجم، شمارۀ 13، 67-77.
-     بلکویی احمد ریاحی. (1389). تئوری­های حسابداری مالی، ترجمۀ پارسائیان علی، تهران، ترمه.
-     پورحیدری، امید؛ غفارلو، عباس. (1391). «بررسی ارتباط بین ساختارهای رقابتی محصولات و محافظه­کاری مشروط حسابداری». پژوهش­های حسابداری مالی، سال چهارم، شمارۀ 2، پیاپی (12)، 41-62.
-     قربانی، س؛ موحدمجد، م و منفرد مهارلوئی. م. (1392).  «رقابت در بازار محصول، ترکیب هیئت‌مدیره و کیفیت افشای اطلاعات: شواهدی از بورس اوراق بهادار تهران». تحقیقات حسابداری و حسابرسی، سال پنجم، شمارۀ 19،  92-105.
-     معین­الدین، محمود؛ مسعودی، زهرا. (1391). «بررسی رابطۀ کیفیت افشای شرکتی و عدم تقارن اطلاعاتی».  نظریه­های نوین حسابداری، سال دوم، شمارۀ 2، پیاپی (4)، 109-132.
-     موسوی جهرمی، یگانه؛ خداداد کاشی، فرهاد؛ زیارتی، مینو. (1388). «بررسی رابطۀ بین درجۀ تمرکز بازار و نرخ مؤثر مالیات بر شرکت­ها: مطالعۀ موردی صنایع لاستیک و پلاستیک ایران». مالیات، دورۀ جدید، شمارۀ 7، مسلسل (57)، 85-100.
-     مؤمنی، منصور؛ فعال قیومی، علی. (1389). تحلیل‌های آماری با استفاده از SPSS، تهران، منصور مؤمنی.
-     نمازی، محمد؛ ابراهیمی، شهلا. (1391). «بررسی ارتباط بین ساختار رقابتی بازار محصول و بازده سهام». پژوهش­های تجربی حسابداری مالی، سال دوم، شمارۀ 1، پیاپی (3)، 9-27.
-      Akimova, I., (2000).”Development of market orientation and competitiveness of Ukrainian firms”. European Journal of Marketing, Vol. 34, No. 9/10, pp. 1128-1148.
-      Ali, A., Klasa, S., & Yeung, P. E. (2012). “Industry concentration and corporate disclosure policy”. Available at SSRN 1696844.
-      Botosan, C. A., & Stanford, M., (2005). “Managers’ motives to withhold segment disclosures and the effect of SFAS No. 131 on analysts’ information environment”. The Accounting Review, Vol.80, No. 3, pp. 751–771.
-      Clinch, G., Verrecchia, R.E., (1997). “Competitive disadvantage and discretionary disclosure in industries”. Australian Journal of Management, Vol. 22, No. 2, pp. 125–138.
-      Darrough, M. N., and N. M. Stroughton, (1990). “Financial disclosure policy in an entrygame”, Journal of Accounting and Economics, Vo. 12, No.1/3, pp. 219–243.
-      Dhaliwal, D.S., Huang, S.X.,Khurana, I., Pereira, R., (2008). “Product Market Competition and Accounting Conservatism”. Available at URL:http://www.ssrn.com.
-      Evans, J. H., & Sridhar, S. S., (2002). “Disclosure-disciplining mechanisms: Capital markets, product markets, and shareholder litigation”. The Accounting Review, Vol. 77, No. 3, pp. 595–626.
-      Harris, M. S., (1998). “The association between competition and managers’ business segment reporting decisions”. Journal of Accounting Research, Vol.36, No. 1, pp. 111–128.
-      Hou, K., & Robinson, D. T., (2006). “Industry Concentration and Average Stock Returns”.Journal of Finance, Vol. 61, No. 4, pp. 1927–1956.
-            Karuna, C. (2007). “Industry product market competition and managerial incentives”. Journal of Accounting and Economics, Vol. 43, No. 4, pp. 275–297.
-      Li, X.,(2010). “The impacts of product market competition on the quantity and quality of voluntary disclosures”. Review of Accounting Studies, Vol.15, No.3, pp.663-711. 
-      Lin, C., & Wei, L., (2014). “Product Market Competition and Firms’ Voluntary Disclosure Behavior: Evidence from a Quasi-natural Experiment”. Working Paper.
-      Nickell, S., (1996). “Competition and corporate performance”. Journal of Political Economy, Vol. 104, No. 4, pp. 724–746.
-      Raith, M., (2003). “Competition, risk and managerial incentives”. American Economic Review, Vol.93, No. 4, pp. 1425–1436.
-      Randøy, T., & Jenssen, J. I., (2004). “Board independence and product market competition in Swedish firms”. Corporate Governance: An International Review, Vol. 12, No. 3, pp. 281–289.
-      Sharma, V. (2010). “Stock Returns and Product Market Competition: beyond Industry Concentration”. Review of Quantitative Finance and Accounting, Vol. 37, No. 3, pp. 283-299.
-      Shin, C.Y., (2013). “Voluntary Disclosure and the Type of Product Market Competition: Capacity vs. Price”. Journal of Modern Accounting and Auditing, Vol. 9, No. 4, pp. 505-526.
-      Teng, W., & Li, Ch. (2011). “Product Market Competition, Board Structure, and Disclosure Quality”. Frontiers of Business Research in China, Vol. 5, No. 2, pp. 291-316.
-      Verrecchia, R., (1983). “Discretionary disclosure”. Journal of Accounting and Economics, Vol. 5, pp. 179–94.
-      Wagenhofer, A., (1990). “Voluntary disclosure with a strategic opponent”.  Journal of Accounting and Economics, Vol. 12, No. 4, pp. 341–363.
 
 
 
Financial Management Strategy
Volume 2, Issue 4 - Serial Number 7
February 2014
Pages 91-112

Files

History

  • Receive Date: 29 August 2015
  • Accept Date: 29 August 2015

Share

How to cite

Statistics