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

Ju-Chun Yen, Shu-Hsing Li and Kuo-Tay Chen

Asia-Pacific Journal of Accounting & Economics, 2016, vol. 23, issue 1, 43-74

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.

Date: 2016
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Citations: View citations in EconPapers (3)

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DOI: 10.1080/16081625.2014.1003569

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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