Review of Financial Studies Vol. 35 No. 9 2022
Competition Links and Stock Returns
Abstract
This paper demonstrates that value-relevant information about a firm appearing in regulatory disclosures of other firms is overlooked by investors. Firms highly mentioned in the 10-K competition section of other firms tend to outperform with risk-adjusted returns of up to 9% annually. Outperformance is concentrated in firms whose competition references are made in the context of targeting rather than admiration. Consistent with investor inattention, abnormal returns stem from cross-sector competition mentions as well as firms with low-analyst coverage. Moreover, highly mentioned firms exhibit improved fundamentals in subsequent years, further signifying they are underpriced.
- DOI
- 10.1093/rfs/hhab133
- Volume
- 35
- Issue
- 9
- Pages
- 4300-4340
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref