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

Ju Chun Yen, Shu Hsing Li, Kuo Tay Chen

Research output: Contribution to journalArticlepeer-review

4 Scopus citations

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.

Original languageEnglish
Pages (from-to)43-74
Number of pages32
JournalAsia-Pacific Journal of Accounting and Economics
Volume23
Issue number1
DOIs
StatePublished - 2 Jan 2016

Keywords

  • industry concentration
  • product market competition
  • proprietary cost
  • risk factor disclosure
  • textual analysis

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