Industry Concentration and Cash Flow at Risk

Yen-Chen Chiu ()
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Yen-Chen Chiu: Department of Finance, National Taichung Institute of Technology, Taichung, Taiwan

Economics Bulletin, 2010, vol. 30, issue 1, 405-413

Abstract: This paper explores the link between industry concentration, which is a feature of the product markets in which firms operate, and the risk of a firm's cash flows, offering the first empirical evidence of the risky cash-flow implications of industry market structure. Our analysis shows that on average highly concentrated industries have experienced lower volatility of cash flows while the volatility of cash flows for competitive industries is higher. Our findings are consistent with the view that innovation and distress risk, which is more pronounced in competitive industries, are prized sources of risk in the context of the cash-flow-at-risk.

Keywords: Cash-flow-at-risk; Industry Concentration (search for similar items in EconPapers)
JEL-codes: C1 C5 (search for similar items in EconPapers)
Date: 2010-01-29
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