Competition Culture and Corporate Finance: A Measure of Firms' Competition Culture Based on a Textual Analysis of 10-K Filings

This book explores the relationship between competition culture and corporate finance, using a measure of firms' competition culture based on a textual analysis and natural language processing (NPL) of 10-K filings. It finds that transient institutional ownership intensifies firms' competition culture, while dedicated institutional ownership lessens it. Firms with greater competition culture achieve higher short-term stock return performance, experience greater incidence of idiosyncratic stock price crashes, and are more prone to meet/beat analysts' earnings expectations and engage in accruals-based earnings manipulation. The book also examines the role played by competition culture in financial firms and shows that banks with greater levels of competition culture are more prone to engage in procyclical lending activity.

Format: Hardback
Length: 249 pages
Publication date: 25 April 2023
Publisher: Springer International Publishing AG

This comprehensive book delves into the intricate relationship between firms' competition culture and various aspects of corporate finance. Through a meticulous textual analysis and advanced natural language processing (NPL), it introduces a novel measure of competition culture based on the comprehensive analysis of firms' 10-K filings. By employing this measure, the book explores a wide range of phenomena, including institutional ownership structure, stock return performance, idiosyncratic stock price crash risk, meeting/beating analysts' earnings expectations, and earnings management activity.

In particular, the book provides compelling evidence that transient institutional ownership intensifies firms' competition culture, while dedicated institutional ownership tends to dampen it. Furthermore, the findings suggest that firms with a stronger competition culture exhibit higher short-term stock return performance, experience more frequent idiosyncratic stock price crashes, and are more likely to meet or exceed analysts' forecasts and engage in accruals-based earnings manipulation.

To further examine the impact of competition culture on financial firms, the book specifically focuses on banks. It explores the effect of competition culture on bank lending and demonstrates that banks with a greater emphasis on competition culture are generally more inclined to engage in procyclical lending activity. These findings hold significant policy implications and will be of great interest to regulators, accounting standard-setters, managers, firm governance professionals, career academics, researchers, graduates, and individuals with a general interest in the role of corporate culture in the fields of finance, economics, and accounting.

Weight: 478g
Dimension: 210 x 148 (mm)
ISBN-13: 9783031301551
Edition number: 1st ed. 2023