Product market competition and productivity shocks

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    1 Citation (Scopus)


    I investigate the interaction effects of competition and productivity shocks on stocks’ earnings and returns. I find that the sensitivities of earnings and returns to productivity shocks are negatively associated with competition intensity. I also find that the excess returns of productivity shocks-sorted portfolios are lower when competition intensity is high, even after controlling for known return predictors. Overall, the empirical evidence shows firms are less exposed to productivity shocks when competition is high. As such, this study provides a possible mechanism through which the structure of product markets affects stock returns.

    Original languageEnglish
    Pages (from-to)4104-4115
    Number of pages12
    JournalApplied Economics
    Issue number37
    Publication statusPublished - Aug 9 2019


    • Product market competition
    • productivity shocks
    • risk
    • stock returns and earnings

    ASJC Scopus subject areas

    • Economics and Econometrics


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