Causal ambiguity: shape-flip between product market competition at industry level and voluntary disclosure

Abstract

This paper analyses the moderating effect of causal ambiguity on the relation between product market competition (i.e. product substitution) and firms' voluntary disclosure behaviour. Our empirical results show a "shape-flipping function". That is, we observe an inverse U-shaped relation between competition and disclosure when causal ambiguity is low. Such a relation gradually evolves towards a U shape as the level of causal ambiguity increases. Our theoretical explanation is that causal ambiguity relaxes or inhibits the intensity of the proprietary and agency costs of voluntary disclosure (underlying restrictions of competition), and simultaneously strengthens the subjacent incentives of competition to reveal information. We obtain empirical evidence of this global perspective based on logistic estimations of a sample of US manufacturing firms from 2002 to 2015. Our models use earnings per share (EPS) forecast as a proxy of voluntarily disclosed information, inverse margin rate as a proxy of product market competition at industry level, and several proxies of causal ambiguity (i.e. firm complexity and firm predictability).

The moderating role of state ownership in between product market competition and firm value: findings from GMM and fsQCA

“…When product market competition is increased, which results in a lower HHI, this might result in a decrease in firm value. On the other hand, a lack of product market competition results in a constrained supply; because the market creates a market with fewer vendors but more customers, higher prices can generate more profit (Gago Rodríguez et al, 2020). When product market competition is low, which results in a higher HHI, firm value can increase (Liu et al, 2018; Moradi et al, 2017; Singla & Singh, 2019).…”

From sustainable value to shareholder value: The impact of sustainable governance and anti‐corruption programs on market valuation

“…This study corroborates previous suggestions of a positive correlation between anti-corruption actions and market value and finds these actions to have an even stronger influence than sustainable governance itself. It contributes, also, to improve the literature on the voluntary disclosure of bribery information (Gago Rodríguez et al, 2020).…”

Tác động của cạnh tranh ngành đến hiệu quả hoạt động tại các doanh nghiệp niêm yết trên thị trường chứng khoán Việt Nam

“…Đến nay CTN đã được nghiên cứu khá nhiều lĩnh vực kinh tế khác nhau (Babar & Habib, 2021). Cụ thể một số NC xem xét Mối Quan Hệ (MQH) giữa CTN và chất lượng báo cáo tài chính thông qua công bố thông tin (Ali, Klasa, & Yeung, 2014;Darrough & Stoughton, 1990;Ellis, Fee, & Thomas, 2012;Huang, Jennings, & Yu, 2017;Li, 2010;Rodríguez, Guo, Illescas, & Nickel, 2020;Verrecchia, 1983). NC xem xét mối quan hệ giữa CTN và chất lượng BCTC thông qua bền vững thu nhập và tính so sánh được (Dhaliwal, Huang, Khurana, & Pereira, 2014;Healy, Serafeim, Srinivasan, & Yu, 2014;Imhof, Seavey, & Watanabe, 2018).…”