Competition, Risk, and Managerial Incentives

Raith, Michael

doi:10.1257/000282803769206395

Cited by 558 publications

(149 citation statements)

References 13 publications

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“…3 I also find that voluntary acceleration firms tend to operate in industries with relatively lower (higher) competition from existing incumbents (potential entrants). These seemingly conflicting results are consistent with the multi-dimensional nature of competition (Raith 2003;Karuna 2007;Berger 2011). While prior empirical research usually treats competition as a single construct (e.g., 2 Proprietary costs can vary significantly across different types of material contracts.…”

Section: Introductionmentioning

confidence: 69%

“…firm's decisions (Raith 2003;Karuna 2007;Berger 2011). In turn, theories on disclosure predict that a firm is less forthcoming with proprietary information when it faces higher competition from incumbents to preserve its competitive advantage (Verrecchia 1990) and more forthcoming when it faces higher competition from potential entrants, whom the firm seeks to deter from entering (Darrough and Stoughton 1990).…”

Section: Characteristics Of Firms That Accelerate Materials Contract Fmentioning

confidence: 99%

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Revealing Future Prospects without Forecasts: The Case of Accelerating Material Contract Filings

2013

The Accounting Review

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Extant research on voluntary disclosure about future prospects has focused on two forward-looking disclosure mechanisms: management forecasts and conference calls. This study examines the accelerated filing of material contracts as another type of future-related disclosure that involves no forecasting. I find that firms are more likely to accelerate material contract filings when forward-looking disclosures could lack credibility or arouse litigation concerns. However, for proprietary cost considerations, firms delay contract filings when facing high (low) product market competition from incumbents (potential entrants). I also find that accelerated contract filing is incrementally associated with lower information asymmetry. Overall, while presenting a cost-benefit trade-off that is distinctly different from forward-looking disclosures, accelerated contract filing is an important alternative channel through which firms communicate future prospects to investors.

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Section: Introductionmentioning

confidence: 69%

Section: Characteristics Of Firms That Accelerate Materials Contract Fmentioning

confidence: 99%

Revealing Future Prospects without Forecasts: The Case of Accelerating Material Contract Filings

2013

The Accounting Review

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“…The link between competition and managerial incentives has attracted significant theoretical attention (see, for example, Hart, 1983;Hermalin, 1992;Schmidt, 1997;and Raith, 2003) but has not been fully explored empirically. 1 Moreover, the theoretical predictions from this literature are largely ambiguous.…”

Section: Introductionmentioning

confidence: 99%

The Effect of Competition on Executive Compensation and Incentives

Fernandes

Ferreira

2017

J. Human Resources

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This paper studies the effect of increased product market competition on executive compensation and incentives. We use a reform that simplified firm entry regulation in Portugal as a quasi-natural experiment, and exploit its staggered implementation across municipalities for identification. Using employer-employee data, we find that increased competition following the reform raised total pay but reduced the sensitivity of pay to firm performance. This is consistent with theoretical results showing that a fall in entry costs weakens managerial incentive provision. Entry deregulation also increased performanceinduced CEO turnover and firms' probability of exit, suggesting that competition provides direct incentives for managerial effort.

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“…Product market competition serves to reduce managerial opportunism and in this sense brings into alignment the interest of shareholders and managers. (see, for example, Hart, 1983;Scharfstein, 1988;Raith, 2003). It is argued that product market competition forces managers to disgorge cash in order to reduce the risk and cost associated with over-investment.…”

Section: Introduction/backgroundmentioning

confidence: 99%

Product Market Competition and Dividend Payouts of Listed Non-Financial Firms in Nigeria

Obembe

Imafidon

Adegboye

2014

IJEF

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This study sought to examine the impact of product market competition on the dividend payout of non-financial firms listed on the Nigerian Stock Exchange. Data were collected on 76 non-financial firms for 11 years covering 1997-2007 and were analyzed using pooled OLS regression method with robust standard errors. Product market competition was measured by the reciprocal of market power. Our results showed that market power had a positive and significant impact on dividend payment suggesting that product market competition impact negatively on dividend payout of firms in Nigeria. Other factors that significantly and positively influenced dividend payment include profitability and size of firms while firms classified in the manufacturing sub-sector of the exchange paid significantly higher dividends than firms in the commercials and services' sub-sectors. Finally firms that were financially constrained were found to pay significantly lower dividends compared with firms without financial constraints suggesting that Cash flow had a significant impact on dividend payout of firms in Nigeria.

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Competition, Risk, and Managerial Incentives

Cited by 558 publications

References 13 publications

Revealing Future Prospects without Forecasts: The Case of Accelerating Material Contract Filings

Revealing Future Prospects without Forecasts: The Case of Accelerating Material Contract Filings

The Effect of Competition on Executive Compensation and Incentives

Product Market Competition and Dividend Payouts of Listed Non-Financial Firms in Nigeria

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