Product market competition and conditional conservatism

Dan Dhaliwal, Shawn Huang, Inder K. Khurana, Raynolde Pereira

Research output: Contribution to journalArticle

36 Scopus citations

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.

Original languageEnglish (US)
Pages (from-to)1309-1345
Number of pages37
JournalReview of Accounting Studies
Volume19
Issue number4
DOIs
StatePublished - Jan 1 2014

Keywords

  • Firm strategy
  • Market structure
  • Monopoly rents
  • Political costs

ASJC Scopus subject areas

  • Accounting
  • Business, Management and Accounting(all)

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