Product market advertising, heterogeneous beliefs, and the long-run performance of initial public offerings

Chemmanur, Thomas J.; Yan, An

doi:10.1016/j.jcorpfin.2017.06.010

Cited by 37 publications

(8 citation statements)

References 49 publications

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“…Earlier research has recognized the effects of competitive pressure on management decisions, such as cash holding and cash distribution (Alimov, 2014; Byoun and Xu, 2016), investment (Akdoğu and MacKay, 2009, 2012), initial public offerings (Chemmanur and He, 2011; Chemmanur and Yan, 2017) and financial reporting (Li, 2010; Dhaliwal et al , 2014). The study of the effects of product market competition (competition hereafter) on managerial behavior has produced two competing views: competition intensifies agency problems and managerial opportunism (governance view), according to one school of thought.…”

Section: Introductionmentioning

confidence: 99%

How does competition shape managerial decisions? Product market competition and financial statement comparability

Majeed

Yan

Tauni

2018

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Purpose The purpose of this paper is to explore the effects of competitive pressure on financial statements’ comparability (comparability) by analyzing various dimensions of competition. Design/methodology/approach The authors study the effect of competition on comparability using the comparability measure of De Franco et al. (2011) and various proxies for competition, competition from existing/potential rivals and non-price competition (NPC). Findings This study documents that competition is positively associated with comparability, and this effect is more (less) pronounced for industry followers (leaders). The authors also document that competition from existing rivals enhances comparability, but competition from potential entrants does not. Moreover, NPC is also a significant determinant of comparability. Furthermore, the competition from existing/potential rivals plays no significant role in the production of comparable financial statements in state-owned enterprises. The results are robust to alternative measures of comparability and methodological approaches. Originality/value This study is the first empirical study that documents a new channel (comparability) through which competition affects financial statements. The findings support the argument that competitive pressure acts as a governance mechanism, disciplines management and increases comparability leading to lower information asymmetry (governance view). However, the findings contest the argument that higher competition motivates managers to withhold information (proprietary cost hypothesis). By examining the effect of state ownership, this study might also help to characterize the effects of changes in corporate objectives on managerial decisions related to financial reporting.

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Section: Introductionmentioning

confidence: 99%

How does competition shape managerial decisions? Product market competition and financial statement comparability

Majeed

Yan

Tauni

2018

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“…Such factors range from firm characteristics (Willenborg et al, 2015), to CEO human capital (Kaplan et al, 2012;Cadman and Sunder, 2014), to the presence of sophisticated investors such as venture capitalists (Jain and Kini, 2000). There is also some evidence that pre-IPO promotion efforts, including media coverage and product advertising positively affect short-term (Benveniste and Spindt, 1989;DuCharme et al, 2001;Cook et al, 2006;Chemmanur and Yan, 2009) and longterm (Liu et al, 2014;Chemmanur and Yan, 2017) IPO performance. Given the disclosure limitations imposed on IPO firms during the quiet period (Bradley et al, 2003), media coverage could play a significant role in the development of firm visibility and assessment of its value (Drake et al, 2014).…”

Section: Ir Consultants and Ipo Performance: Do Ir Firms Help?mentioning

confidence: 99%

Investor relations and IPO performance

et al. 2020

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“…Since IPO is a complex multifactor process, in which the company faces additional time and material costs, it can be concluded that not every IPO can be successful (Chemmanur & Yan, 2017;Chourou, Saadi, & Zhu, 2018). Therefore, the purpose of the study is to assess the influence of IPOs of a commercial bank on its financial performance.…”

Section: Purpose Of the Studymentioning

confidence: 99%