Perceived Competition, Profitability and the Withholding of Information About Sales and the Cost of Sales

Posted: 27 Aug 2011

See all articles by Elisabeth Dedman

Elisabeth Dedman

Surrey Business School

Clive S. Lennox

University of Southern California

Date Written: 2009

Abstract

We investigate the relation between perceived competition and voluntary disclosure in the absence of capital market incentives by examining private UK companies, which have the option to withhold sales and costs of sales information from their publicly-filed accounts. We survey managers about their companies’ competitive environments and we calculate archival measures of industry competition. We find that managers are more likely to withhold information about sales and costs if they perceive that current or potential competition is strong. Consistent with disclosure being costlier for successful firms, we also find that more profitable companies are more likely to withhold information.

Keywords: Voluntary disclosure, Managerial perceptions, Product market competition, Industry concentration

JEL Classification: M41, L10, L60

Suggested Citation

Dedman, Elisabeth and Lennox, Clive, Perceived Competition, Profitability and the Withholding of Information About Sales and the Cost of Sales (2009). Journal of Accounting & Economics (JAE), Vol. 48, 2009. Available at SSRN: https://ssrn.com/abstract=1917888

Elisabeth Dedman

Surrey Business School ( email )

University of Surrey
Stag Hill Campus
Guildford, GU2 7XH
United Kingdom

Clive Lennox (Contact Author)

University of Southern California ( email )

2250 Alcazar Street
Los Angeles, CA 90089
United States

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