Product Market Competition in Accounting, Finance, and Corporate Governance: A Review of the Literature

59 Pages Posted: 30 Sep 2020

See all articles by Md. Babar

Md. Babar

Massey University - Massey University Auckland

Ahsan Habib

Massey University - School of Accountancy; Massey University

Date Written: August 16, 2020

Abstract

Product market competition has been identified as one of the most powerful corporate governance tools for motivating managers to maximize firm value. Consistent with this view, a large body of theoretical and empirical research over the years has investigated the implications of product market competition. This paper synthesizes and critically evaluates the empirical literature on the consequences of product market competition in the accounting, finance, and corporate governance domains. Our review focuses on issues like financial reporting quality, analyst forecasting activities, asset pricing, investment, and financing decisions, and the substitutive versus complementary relationships between product market competition and other corporate governance tools. Our review suggests that, although market competition has profound implications for these issues, the empirical findings often provide conflicting results. We highlight such contradictory findings and offer suggestions for future research. Our review will help researchers intending to further investigate the implications of product market competition, both in the US and internationally.

Keywords: Product Market Competition, Financial Reporting, Corporate Governance, Finance

JEL Classification: G12, G14, G30, L16, M41, M42

Suggested Citation

Babar, Md. and Habib, Ahsan, Product Market Competition in Accounting, Finance, and Corporate Governance: A Review of the Literature (August 16, 2020). Available at SSRN: https://ssrn.com/abstract=3674707 or http://dx.doi.org/10.2139/ssrn.3674707

Md. Babar

Massey University - Massey University Auckland ( email )

Private Bag 102904
North Shore Mail Centre
Auckland, 0745
New Zealand

Ahsan Habib (Contact Author)

Massey University - School of Accountancy ( email )

Auckland
New Zealand

Massey University ( email )

Auckland
New Zealand

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