Competitive Parity, Status Disparity, and Mutual Forbearance: Securities Analysts' Competition for Investor Attention

54 Pages Posted: 29 Mar 2013

See all articles by Anne H. Bowers

Anne H. Bowers

University of Toronto - Rotman School of Management

Henrich R. Greve

INSEAD

Hitoshi Mitsuhashi

Keio University - Faculty of Business and Commerce

Joel A. C. Baum

University of Toronto - Joseph L. Rotman School of Management

Date Written: March 29, 2013

Abstract

Most studies of responses to change in competitive environments focus on competitor-specific adaptations. However, rivals are often acutely aware of one another, and this awareness should influence their competitive behavior. In this study, we focus on three market structures that affect competitive behavior: competitive parity, status disparity, and multipoint contact. In particular, we examine how securities analysts responded to a regulatory discontinuity, Regulation Fair Disclosure (Reg-FD), which promoted competitive parity by eliminating privileged access to proprietary firm information as a critical source of competitive advantage. We predict and find that Reg-FD activated mutual forbearance among analysts linked through multipoint contact. We also predict and find that high-status analysts forbear more strongly. Analysts’ responses to heterogeneity in competitive advantage thus depend importantly on their competitive overlap and status, with notable implications for their behavior and the information they provide to investors.

Suggested Citation

Bowers, Anne H. and Greve, Henrich R. and Mitsuhashi, Hitoshi and Baum, Joel A.C., Competitive Parity, Status Disparity, and Mutual Forbearance: Securities Analysts' Competition for Investor Attention (March 29, 2013). INSEAD Working Paper No. 2013/43/EFE; Rotman School of Management Working Paper No. 2241497. Available at SSRN: https://ssrn.com/abstract=2241497 or http://dx.doi.org/10.2139/ssrn.2241497

Anne H. Bowers

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

Henrich R. Greve (Contact Author)

INSEAD ( email )

F-77305 Fontainebleau Cedex
France

Hitoshi Mitsuhashi

Keio University - Faculty of Business and Commerce ( email )

2-15-45 Mita
Minato-ku
Tokyo 108-8345
Japan

Joel A.C. Baum

University of Toronto - Joseph L. Rotman School of Management ( email )

University of Toronto
105 St. George Street
Toronto, ON, M5S 3E6
Canada
416-978-4914 (Phone)
416-978-4629 (Fax)

HOME PAGE: http://www.rotman.utoronto.ca/~baum

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