Details
| Originalsprache | Englisch |
|---|---|
| Seiten (von - bis) | 233-266 |
| Seitenumfang | 34 |
| Fachzeitschrift | Financial Management |
| Jahrgang | 53 |
| Ausgabenummer | 2 |
| Publikationsstatus | Veröffentlicht - 7 Mai 2024 |
Abstract
We examine the impact of product market competition on firms' systematic risk. Using a measure of total product market similarity, we document a strong negative relationship between market power and market betas. The effect more than triples in the most recent period of low competition. Anticompetitive mergers result in a significant reduction in market betas. Firms facing less competition seem to be partially insulated from systematic discount-rate shocks. Lower equity costs therefore imply that market power is partly self-perpetuating.
ASJC Scopus Sachgebiete
- Volkswirtschaftslehre, Ökonometrie und Finanzen (insg.)
- Volkswirtschaftslehre und Ökonometrie
- Betriebswirtschaft, Management und Rechnungswesen (insg.)
- Bilanzierung
- Volkswirtschaftslehre, Ökonometrie und Finanzen (insg.)
- Finanzwesen
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in: Financial Management, Jahrgang 53, Nr. 2, 07.05.2024, S. 233-266.
Publikation: Beitrag in Fachzeitschrift › Artikel › Forschung › Peer-Review
}
TY - JOUR
T1 - Market power and systematic risk
AU - Hollstein, Fabian
AU - Prokopczuk, Marcel
AU - Würsig, Christoph Matthias
N1 - ACKNOWLEDGMENTS We would like to thank Kathleen Kahle (the editor), ananonymous referee, Maik Dierkes, Andreas Knetsch (discussant), as well as seminar participants at the 2022 Annual Meeting of the German Finance Association, TU Munich, and Leibniz University Hannover for helpful comments and suggestions. Open access funding enabled and organized by Projekt DEAL.
PY - 2024/5/7
Y1 - 2024/5/7
N2 - We examine the impact of product market competition on firms' systematic risk. Using a measure of total product market similarity, we document a strong negative relationship between market power and market betas. The effect more than triples in the most recent period of low competition. Anticompetitive mergers result in a significant reduction in market betas. Firms facing less competition seem to be partially insulated from systematic discount-rate shocks. Lower equity costs therefore imply that market power is partly self-perpetuating.
AB - We examine the impact of product market competition on firms' systematic risk. Using a measure of total product market similarity, we document a strong negative relationship between market power and market betas. The effect more than triples in the most recent period of low competition. Anticompetitive mergers result in a significant reduction in market betas. Firms facing less competition seem to be partially insulated from systematic discount-rate shocks. Lower equity costs therefore imply that market power is partly self-perpetuating.
KW - discount-rate beta
KW - market beta
KW - market power
KW - mergers and acquisitions
KW - product market competition
KW - systematic risk
UR - http://www.scopus.com/inward/record.url?scp=85176949990&partnerID=8YFLogxK
U2 - 10.1111/fima.12438
DO - 10.1111/fima.12438
M3 - Article
VL - 53
SP - 233
EP - 266
JO - Financial Management
JF - Financial Management
SN - 0046-3892
IS - 2
ER -