IDEAS home Printed from https://ideas.repec.org/a/bla/jfinan/v79y2024i4p2845-2884.html
   My bibliography  Save this article

Meeting Targets in Competitive Product Markets

Author

Listed:
  • EMILIO BISETTI
  • STEPHEN A. KAROLYI

Abstract

We show that public banks face negative stock return jumps after missing their earnings per share (EPS) targets, and theoretically and quantitatively link these jumps to bunching behavior in the EPS surprise distribution. Bunching banks cut deposit rates to meet their targets, but do so at the expense of deposit outflows and franchise value losses. Local competitors, including private banks unexposed to capital market pressure, increase deposit rates, compensating depositors for switching. Our results provide new evidence that performance targeting incentives can affect consumer product prices, and suggest that competition may provide a check on public firms' targeting efforts.

Suggested Citation

  • Emilio Bisetti & Stephen A. Karolyi, 2024. "Meeting Targets in Competitive Product Markets," Journal of Finance, American Finance Association, vol. 79(4), pages 2845-2884, August.
    • Handle: RePEc:bla:jfinan:v:79:y:2024:i:4:p:2845-2884
    DOI: 10.1111/jofi.13369
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/jofi.13369
    Download Restriction: no
    File URL: https://libkey.io/10.1111/jofi.13369?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jfinan:v:79:y:2024:i:4:p:2845-2884. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/afaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.