Product Market Threats, Payouts, and Financial Flexibility

Hoberg, Gerard; Phillips, Gordon; Prabhala, Nagpurnanand

doi:10.2139/ssrn.1787315

Cited by 176 publications

(334 citation statements)

References 26 publications

Supporting

Mentioning

305

Contrasting

Order By: Relevance

“…One advantage of this novel and unobtrusive system is that firms can be considered peers even though they might not share the same SIC code. For more details on this classification system and its advantages relative to others, such as SIC codes or the North American Industry Classification System (NAICS) codes, see Phillips (2010a, 2010b) and Hoberg, Phillips, and Prabhala (2014).…”

Section: Independent Variablesmentioning

confidence: 99%

Can Ratings Have Indirect Effects? Evidence from the Organizational Response to Peers’ Environmental Ratings

Sharkey

Bromley

2014

Am Sociol Rev

View full text Add to dashboard Cite

Organizations are increasingly subject to rating and ranking by third-party evaluators. Research in this area tends to emphasize the direct effects of ratings systems that occur when ratings give key audiences, such as consumers or investors, more information about a rated firm. Yet, ratings systems may also indirectly influence organizations when the collective presence of more rated peers alters the broader institutional and competitive milieu. Rated firms may be more responsive to ratings systems when surrounded by more rated peers, and ratings may generate diffuse or spillover effects even among unrated firms. We test these arguments by analyzing how rated and unrated firms change their pollution behavior when more firms in their peer group are rated on environmental performance. Results indicate that the presence of more rated peers is often associated with emissions reductions. This relationship varies, however, by whether a firm was rated, whether the rating was positive or negative (if rated), and, often, features of the competitive and regulatory environment.

show abstract

Section: Independent Variablesmentioning

confidence: 99%

Can Ratings Have Indirect Effects? Evidence from the Organizational Response to Peers’ Environmental Ratings

Sharkey

Bromley

2014

Am Sociol Rev

View full text Add to dashboard Cite

show abstract

“…The authors' work allows them to propose a partial, Industrial Organization-based explanation for the secular increase in cash holdings documented in Bates, Kahle & Stulz (2009), by showing that there is no such secular trend in concentrated industries. Hoberg, Phillips & Prabhala (2014) explore an innovative measure of competitiveness and report largely similar results. Using textual analysis of product descriptions to measure competitive threats, the authors document a strong relation between competition and cash holdings.…”

Section: Liquidity and Product Market Competitionmentioning

confidence: 72%

Corporate Liquidity Management: A Conceptual Framework and Survey

Almeida

Campello

Cunha

et al. 2014

Annu. Rev. Financ. Econ.

175

View full text Add to dashboard Cite

Ensuring that a firm has sufficient liquidity to finance valuable projects that occur in the future is at the heart of the practice of financial management. However, although discussion of these issues goes back at least to Keynes (1936), a substantial literature on the ways in which firms manage liquidity has developed only recently. We argue that many of the key issues in liquidity management can be understood through the lens of a framework in which firms face financial constraints and wish to ensure efficient investment in the future. We present such a model and use it to survey many of the empirical findings on liquidity management. In addition, we discuss agencybased theories of liquidity, the real effects of liquidity choices, and the impact of the 2008-2009 Financial Crisis on firms' liquidity management.

show abstract

“…Guadalupe and Perez-Gonzalez (2011) point out that increases in the intensity of competition lead to lower estimates of private benefits of control from management. Additionally, Hoberg et al (2014) prove that a firm's financial policies are significantly shaped by product market threats and dynamics. In other words, product market competition affects a company's policymaking.…”

Section: Literature and Hypothesis Developmentmentioning

confidence: 99%

“…The definitions of other variables are the same as in Model 1. Hoberg et al (2014) point out that management prefers to keep capital in the company reserves for contingent use rather than distributing cash dividends to shareholders when the outside environment is competitive. In this situation, companies hold more free cash flow.…”

Section: The Effect Of Product Market Competition To Capital Expenditmentioning

confidence: 99%

“…Haye (1997) finds that when the product is from an industry with a low degree of competition, it will be more difficult for the company's product market monitoring mechanism to function. Hoberg, Phillips, and Prabhala (2014) argue that in a competitive environment, the company's management will prefer not to pay cash dividends and keep capital in the company. In this way, the company will have more free cash flow.…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation