دانلود رایگان مقاله انگلیسی رقابت بازار محصولات و مدیریت درآمدها: یک تجزیه و تحلیل سطح شرکتی - وایلی 2017

Abstract

In this paper, we employ a firm-level measure of product market competition constructed from the textual analysis of firms’ 10-K filings to examine the relationship between managers’ perceived competition pressure and earnings management. We find that accounting irregularities and accrual-based earnings management are positively related to product market competition. This finding is consistent with the notion that competition pressure increases managerial incentives to manage earnings, due to their career concerns. We also find that real earnings management is negatively related to product market competition. This finding suggests that real earnings management involves actions that decrease firms’ competitiveness and thus is costly for firms confronted with high competition pressure.

5. Conclusion

In this paper, we employ a firm-level measure of competition pressure to examine the effects of product market competition on managers’ incentives to manage earnings. Unlike previous studies that generally use industry-level competition measures, our measure can capture both industry-level competition characteristics and variations within industries. With this measure, we find that firms with greater competition pressure are more likely to have accounting irregularities, engage in accrual-based earnings management, and encounter shareholder lawsuits. This finding is consistent with Karuna, Subramanyam, and Tian (2012). Nevertheless, we also find a negative relationship between competition pressure and real earnings management. This finding suggests that competition makes real earnings management costly, and firms under great competition pressure tend to avoid real activities manipulation. Our results are robust to using an instrument variable of competition and alternative measures of competition pressure.

In the existing literature, competition can be viewed as the force that improves firm efficiency and social welfare. In several recent studies, researchers investigate the dark side of competition, especially managers’ behavior under competition pressure. Our study contributes to the existing literature by providing evidence on the effects of competition pressure on managers’ financial reporting behavior. It sheds new light on the research of agency problems in different competitive environments.