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Product market competition and earnings exposure to productivity shocks

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  • Abdoh, Hussein

Abstract

This study examines the relationship between product market competition (measured by product similarities) and earnings exposure to common and specific production shocks, finding that higher product similarity lowers profit sensitivity to common productivity shocks, while increasing sensitivity to specific productivity shocks.

Suggested Citation

  • Abdoh, Hussein, 2019. "Product market competition and earnings exposure to productivity shocks," Economics Letters, Elsevier, vol. 174(C), pages 31-34.
    • Handle: RePEc:eee:ecolet:v:174:y:2019:i:c:p:31-34
    DOI: 10.1016/j.econlet.2018.10.026
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    References listed on IDEAS

    as
    1. Balvers, Ronald J. & Huang, Dayong, 2007. "Productivity-based asset pricing: Theory and evidence," Journal of Financial Economics, Elsevier, vol. 86(2), pages 405-445, November.
    2. Cochrane, John H, 1996. "A Cross-Sectional Test of an Investment-Based Asset Pricing Model," Journal of Political Economy, University of Chicago Press, vol. 104(3), pages 572-621, June.
    3. Cochrane, John H, 1991. "Production-Based Asset Pricing and the Link between Stock Returns and Economic Fluctuations," Journal of Finance, American Finance Association, vol. 46(1), pages 209-237, March.
    4. Rosenberg, Barr & McKibben, Walt, 1973. "The Prediction of Systematic and Specific Risk in Common Stocks," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 8(2), pages 317-333, March.
    5. Gerard Hoberg & Gordon Phillips, 2016. "Text-Based Network Industries and Endogenous Product Differentiation," Journal of Political Economy, University of Chicago Press, vol. 124(5), pages 1423-1465.
    6. Fama, Eugene F. & French, Kenneth R., 2006. "Profitability, investment and average returns," Journal of Financial Economics, Elsevier, vol. 82(3), pages 491-518, December.
    7. Fama, Eugene F & French, Kenneth R, 1995. "Size and Book-to-Market Factors in Earnings and Returns," Journal of Finance, American Finance Association, vol. 50(1), pages 131-155, March.
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    Cited by:

    1. Abdoh, Hussein, 2023. "Rivals risk-taking incentives and firm corporate policy," The Quarterly Review of Economics and Finance, Elsevier, vol. 90(C), pages 106-123.
    2. Abdoh, Hussein & Varela, Oscar, 2021. "What lies behind the asset growth effect?," Global Finance Journal, Elsevier, vol. 48(C).
    3. Fan, Jiaying & Xu, Meiling, 2024. "The power of competition: Unveiling China's digital transformation through product market dynamics," Economics Letters, Elsevier, vol. 234(C).

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