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Product market competition and conditional conservatism

Author

Listed:
  • Dan Dhaliwal

    (University of Arizona)

  • Shawn Huang

    (Arizona State University)

  • Inder K. Khurana

    (University of Missouri-Columbia)

  • Raynolde Pereira

    (University of Missouri-Columbia)

Abstract

Based on pooled cross-sectional analysis, we find a robust positive relation between product market competition and conditional accounting conservatism. We also find evidence of an inter-temporal increase in conditional conservatism following industry deregulation and increased antitrust case filings. Distinguishing further between two dimensions of competition, we find conditional conservatism is greater when there is a higher threat of new entrants as well as stiff existing competition. Moreover, we find these results largely hold for industry followers as opposed to industry leaders, suggesting that strategic considerations shape the extent to which product market competition affects conditional conservatism.

Suggested Citation

  • Dan Dhaliwal & Shawn Huang & Inder K. Khurana & Raynolde Pereira, 2014. "Product market competition and conditional conservatism," Review of Accounting Studies, Springer, vol. 19(4), pages 1309-1345, December.
    • Handle: RePEc:spr:reaccs:v:19:y:2014:i:4:d:10.1007_s11142-013-9267-2
    DOI: 10.1007/s11142-013-9267-2
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    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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