The impact of product market competition on stock price crash risk

Abstract

Purpose

The purpose of this paper is to explore the impact of product market competition on the risk of stock price crash based on the degree of industry competition and the competitive position of enterprises.

Design/methodology/approach

This paper chooses the data of Shanghai and Shenzhen A-share listed companies from 2009 to 2017 as samples and uses a threshold regression model to explore the impact of product market competition on the risk of a stock price crash.

Findings

The results show that: the overall level of industry competition is negatively correlated with the risk of stock price crash; the competitive position of enterprises and the risk of a stock price crash. The correlation is not significant: for high competitive enterprises, the degree of industry competition is negatively correlated with the risk of stock price crash; for low competitive enterprises, the degree of industry competition is positively correlated with the risk of a stock price crash and the conclusions obtained have passed the robustness test.

Originality/value

This paper not only enriches the literature on the relationship between product market competition and the risk of stock price crash but also has reference significance for supervisors to allocate resources to supervise information disclosure of listed companies.

Citation

Li, J. and Luo, Z. (2020), "The impact of product market competition on stock price crash risk", Journal of Business & Industrial Marketing, Vol. 35 No. 7, pp. 1141-1153. https://doi.org/10.1108/JBIM-12-2018-0375