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Product market competition and firms’ narrative disclosures: evidence from risk factor disclosures

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  • Ju-Chun Yen
  • Shu-Hsing Li
  • Kuo-Tay Chen

Abstract

This study examines how product market competition affects firms’ narrative disclosures of Item 1A Risk Factors in 10-K filings. We find that firms in more concentrated industries tend to disclose a greater quantity of narrative risk information. Besides, such firms provide risk disclosures more similar to those of their competitors, hence reducing the quality of the disclosure. We also document similar findings for idiosyncratic risk disclosure, which is inherently more firm-specific. The results imply that firms in more concentrated industries avoid divulging risk information in their narrative disclosures by disclosing more similar information rather than by reducing the amount of risk disclosure.

Suggested Citation

  • Ju-Chun Yen & Shu-Hsing Li & Kuo-Tay Chen, 2016. "Product market competition and firms’ narrative disclosures: evidence from risk factor disclosures," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 23(1), pages 43-74, March.
    • Handle: RePEc:taf:raaexx:v:23:y:2016:i:1:p:43-74
    DOI: 10.1080/16081625.2014.1003569
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    Cited by:

    1. Shih‐Chu Chou & Zhe‐An Li & Tawei Wang & Ju‐Chun Yen, 2023. "How the quality of initial coin offering white papers influences fundraising: Using security token offerings white papers as a benchmark," Intelligent Systems in Accounting, Finance and Management, John Wiley & Sons, Ltd., vol. 30(1), pages 3-18, January.
    2. Babar, Md. & Habib, Ahsan, 2021. "Product market competition in accounting, finance, and corporate governance: A review of the literature," International Review of Financial Analysis, Elsevier, vol. 73(C).
    3. Ahsan Habib & Mostafa Monzur Hasan, 2020. "Business strategies and annual report readability," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(3), pages 2513-2547, September.

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