The Effect of CDS Trading on Product Market Competition: Evidence from 10-K Filings
Abstract
:1. Introduction
2. Literature and Hypotheses Development
2.1. CDS and Monitoring
2.2. Institutional Investors
2.3. Delving into the Information Channel
3. Materials and Methods
3.1. Sample Construction
3.2. Empirical Design
4. Results and Discussion
4.1. Descriptive Statistics
4.2. The Impact of CDS Trading on Product Market Competition
4.2.1. The Baseline Results
4.2.2. Addressing Endogeneity—Parallel Trend and Overlap Weight Propensity Score Matching
4.3. Institutional Presence
4.4. Information Channels
5. Conclusions
Author Contributions
Funding
Data Availability Statement
Conflicts of Interest
Appendix A
Variable | Description |
---|---|
Tradedpost | Tradedpost dummy equals one for observations that occur in the year of CDS initiation or in years thereafter, and zero otherwise. |
Competition Measures | |
Fluidity | A textual based firm-level measure for competitive threat as in Hoberg et al. (2014) |
Fluidity_Rank | Fluidity_Rank is constructed by assigning to firms the decile rank of their Fluidity in the whole sample, with 1 being in the lowest Fluidity decile and 10 being the highest. |
Fluidity_Rank(Year) | Fluidity_Rank is constructed by assigning to firms the decile rank of their Fluidity within each fiscal year, with 1 being in the lowest Fluidity decile and 10 being in the highest. |
Fluidity_Rank(SIC2) | Fluidity_Rank(SIC2) is constructed by assigning to firms the decile rank of their Fluidity within each 2-digit SIC and fiscal year, with 1 being in the lowest Fluidity decile and 10 being in the highest. |
Fluidity_Rank(SIC3) | Fluidity_Rank(SIC3) is constructed by assigning to firms the decile rank of their Fluidity within each 3-digit SIC and fiscal year, with 1 being in the lowest Fluidity decile and 10 being in the highest. |
Pctcomp | A textual-based firm-level measure for competitive threat as in Li et al. (2013). |
HHI | Herfindahl-Hirschman Index is calculated based on the lead annual sales data from the Compustat database for each 2-digit SIC. |
Linguistic Measures | |
FogIndex | Fog Index measured as 0.4 × [(total number of words/total number of sentences) + 100 × (complex words/total number of words)] where complex words are defined as words with three syllables or more |
Words | Natural log of the number of words in Form 10-K |
Kincaid | Flesch–Kincaid grade level measured as 0.39 × (total words/total sentences) + 11.8 × (total syllables/total words) − 15.59 |
Net_Tone | Net_Tone is measured by taking the difference between the positive and negative words as defined in Loughran and McDonald (2011) divided by the total number of positive and negative words. |
Negative_Tone | The total number of negative words, as defined in Loughran and McDonald (2011), divided by the total words from Form 10-K multiplied by 100. |
Positive_Tone | The total number of positive words, as defined in Loughran and McDonald (2011), divided by the total words from Form 10-K multiplied by 100. |
Firm Characteristics | |
Roa | Income before extraordinary item normalized by total assets |
Size | Natural log of total assets |
Tangibility | Property, plant, and equipment normalized by total assets |
Dividend | A dummy equals to one if a firm pays out a positive dividend in year t |
Cash | Cash and cash equivalent normalized by total assets |
TobinsQ | Tobin’s Q ratio is calculated as (Total asset + Market Value of Equity − Book Value of Equity)/Total Assets |
DEratio | Total debt over total common equity value |
High_Inst | A dummy equal to one if the average institutional ownership in a particular year, as disclosed in Form 13F, is higher than the sample median. |
High_Inst(SIC2) | A dummy equal to one if the average institutional ownership in a particular 2-digit SIC and year, as disclosed in Form 13F, is higher than the sample median. |
High_Inst(SIC3) | A dummy equal to one if the average institutional ownership in a particular 3-digit SIC and year, as disclosed in Form 13F, is higher than the sample median. |
(1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | (9) | (10) | (11) | (12) | (13) | (14) | (15) | (16) | (17) | (18) | (19) | (20) | (21) | (22) | (23) | ||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(1) | Fluidity | 1.00 | ||||||||||||||||||||||
(2) | Fluidity_Rank | 0.96 | 1.00 | |||||||||||||||||||||
(3) | Fluidity_Rank(Year) | 0.95 | 0.98 | 1.00 | ||||||||||||||||||||
(4) | Fluidity_Rank(SIC2) | 0.73 | 0.76 | 0.77 | 1.00 | |||||||||||||||||||
(5) | Fluidity_Rank(SIC3) | 0.65 | 0.66 | 0.67 | 0.86 | 1.00 | ||||||||||||||||||
(6) | Pctcomp | 0.14 | 0.15 | 0.15 | 0.12 | 0.10 | 1.00 | |||||||||||||||||
(7) | HHI | −0.20 | −0.20 | −0.20 | −0.03 | −0.05 | −0.11 | 1.00 | ||||||||||||||||
(8) | FogIndex | 0.13 | 0.14 | 0.14 | 0.11 | 0.09 | −0.10 | −0.03 | 1.00 | |||||||||||||||
(9) | Words | 0.24 | 0.24 | 0.25 | 0.21 | 0.19 | −0.23 | −0.03 | 0.29 | 1.00 | ||||||||||||||
(10) | Kincaid | 0.16 | 0.16 | 0.16 | 0.13 | 0.11 | −0.15 | −0.05 | 0.98 | 0.33 | 1.00 | |||||||||||||
(11) | Net_Tone | −0.06 | −0.08 | −0.08 | −0.05 | −0.03 | 0.24 | −0.04 | −0.11 | −0.29 | −0.13 | 1.00 | ||||||||||||
(12) | Negative_Tone | 0.22 | 0.23 | 0.23 | 0.20 | 0.16 | −0.17 | −0.04 | 0.12 | 0.33 | 0.17 | −0.73 | 1.00 | |||||||||||
(13) | Positive_Tone | 0.20 | 0.17 | 0.17 | 0.17 | 0.16 | 0.14 | −0.11 | −0.01 | −0.01 | 0.02 | 0.58 | 0.08 | 1.00 | ||||||||||
(14) | Roa | −0.19 | −0.18 | −0.19 | −0.11 | −0.08 | −0.02 | 0.03 | 0.03 | −0.01 | 0.03 | 0.03 | −0.03 | −0.01 | 1.00 | |||||||||
(15) | Size | −0.06 | −0.07 | −0.07 | 0.01 | 0.04 | −0.26 | 0.08 | 0.04 | 0.28 | 0.07 | −0.03 | 0.11 | 0.08 | 0.46 | 1.00 | ||||||||
(16) | Tangibility | −0.04 | −0.04 | −0.04 | −0.05 | −0.03 | −0.11 | 0.18 | −0.04 | 0.03 | −0.06 | −0.03 | −0.13 | −0.19 | 0.05 | 0.20 | 1.00 | |||||||
(17) | Dividend | −0.17 | −0.18 | −0.18 | −0.15 | −0.11 | −0.14 | 0.06 | −0.03 | 0.02 | −0.04 | 0.08 | −0.12 | −0.03 | 0.11 | 0.34 | 0.16 | 1.00 | ||||||
(18) | Cash | 0.41 | 0.38 | 0.39 | 0.25 | 0.19 | 0.17 | −0.18 | 0.06 | 0.00 | 0.09 | 0.02 | 0.17 | 0.24 | −0.11 | −0.27 | −0.41 | −0.20 | 1.00 | |||||
(19) | TobinsQ | 0.17 | 0.17 | 0.17 | 0.10 | 0.08 | 0.12 | −0.02 | −0.03 | −0.01 | −0.02 | 0.00 | −0.01 | 0.01 | −0.74 | −0.43 | −0.07 | −0.10 | 0.16 | 1.00 | ||||
(20) | DEratio | −0.04 | −0.03 | −0.04 | 0.00 | 0.01 | −0.07 | 0.07 | 0.01 | 0.06 | 0.00 | −0.10 | 0.07 | −0.08 | −0.04 | 0.01 | 0.09 | −0.00 | −0.13 | −0.00 | 1.00 | |||
(21) | High_Inst | −0.09 | −0.09 | −0.10 | −0.03 | −0.01 | −0.04 | 0.03 | 0.01 | 0.02 | 0.03 | 0.05 | 0.04 | 0.11 | 0.22 | 0.49 | 0.05 | 0.14 | −0.08 | −0.18 | −0.10 | 1.00 | ||
(22) | High_Inst(SIC2) | −0.04 | −0.04 | −0.04 | −0.03 | −0.00 | −0.05 | −0.01 | 0.02 | 0.04 | 0.03 | 0.03 | 0.04 | 0.10 | 0.20 | 0.45 | 0.05 | 0.13 | −0.04 | −0.16 | −0.10 | 0.86 | 1.00 | |
(23) | High_Inst(SIC3) | −0.00 | −0.00 | −0.01 | −0.00 | 0.01 | −0.04 | −0.02 | 0.03 | 0.04 | 0.04 | 0.03 | 0.05 | 0.10 | 0.19 | 0.41 | 0.04 | 0.11 | −0.02 | −0.15 | −0.10 | 0.80 | 0.87 | 1.00 |
(1) | (2) | (3) | (4) | |
---|---|---|---|---|
Fluidity_Rank | Fluidity_Rank(Year) | Fluidity_Rank(SIC2) | Fluidity_Rank(SIC3) | |
Tradedpost | 0.5281 *** | 0.5114 *** | 0.3408 *** | 0.3397 *** |
(0.093) | (0.093) | (0.117) | (0.125) | |
Roa | −0.1633 *** | −0.1591 *** | −0.0914 *** | −0.0915 *** |
(0.024) | (0.024) | (0.028) | (0.030) | |
Size | 0.3047 *** | 0.3063 *** | 0.2436 *** | 0.2623 *** |
(0.024) | (0.025) | (0.031) | (0.033) | |
Tangibility | 0.6053 *** | 0.5816 *** | 0.3395 * | 0.4329 ** |
(0.160) | (0.163) | (0.183) | (0.200) | |
Dividend | −0.0505 | −0.0369 | −0.0383 | −0.0153 |
(0.032) | (0.033) | (0.041) | (0.045) | |
Cash | 0.6380 *** | 0.6471 *** | 0.4909 *** | 0.4479 *** |
(0.093) | (0.095) | (0.106) | (0.115) | |
TobinsQ | 0.0180 *** | 0.0187 *** | 0.0130 *** | 0.0129 *** |
(0.004) | (0.004) | (0.004) | (0.004) | |
DEratio | 0.0035 | 0.0041 | 0.0107 *** | 0.0132 *** |
(0.003) | (0.003) | (0.004) | (0.004) | |
Firm FE | Yes | Yes | Yes | Yes |
Year FE | Yes | Yes | Yes | Yes |
Adj. R2 | 0.80 | 0.80 | 0.69 | 0.62 |
Observations | 51,043 | 51,043 | 51,043 | 51,043 |
1 | |
2 | A tension exists between the two forces, which are not mutually exclusive. Therefore, the empirical testing of the above competing hypotheses is a joint test that may only reveal which of the two forces dominates. |
3 | Five-year is the most common maturity of CDS contracts. See Landsman et al. (2023). |
4 | The data for Pctcomp was retrieved from Feng Li’s website (http://webuser.bus.umich.edu/feng/, accessed on 20 February 2020). |
5 | Please note that some observations from our final sample will be dropped depending on the exact specification of our regression models. |
6 | See http://mba.tuck.dartmouth.edu/pages/faculty/ken.french/data_library/det_17_ind_port.html, accessed on 29 August 2022. |
7 | There are two important reasons for using Fluidity as our main measures. First, we believe that the construction of Fluidity fits the definition of product market competition better. Second, we will be able to retain more observations using Fluidity. |
8 | To ensure the robustness of our results, we follow Li and Zhan (2018) by creating alternative Fluidity measures and repeat our model (1). We construct Fluidity_Rank by assigning firms to the decile rank of their Fluidity within each year, with 1 being in the lowest Fluidity decile and 10 being in the highest. We also further refine our ranking approach by including industry classifications (i.e., Fluidity_Rank(SIC2) and Fluidity_Rank(SIC3)). The results are reported in Appendix A Table A3, which yield unanimously similar results in comparison to those in Table 3. |
9 | Please see Appendix A Table A1 for detailed definition of the tone variables. |
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Panel A: All Firms | Full Sample | Non-CDS-Traded (a) | CDS-Traded Firms (b) | |||||||||||
N | Mean | SD. | N | Mean | SD. | N | Mean | SD. | t-Test (a)−(b) | |||||
Competition Measures | ||||||||||||||
Fluidity | 51,043 | 6.660 | 3.348 | 46,868 | 6.722 | 3.349 | 4175 | 5.963 | 3.260 | 0.759 *** | ||||
Fluidity_Rank | 51,043 | 5.076 | 2.825 | 46,868 | 5.132 | 2.815 | 4175 | 4.447 | 2.865 | 0.685 *** | ||||
Fluidity_Rank(Year) | 51,043 | 5.006 | 2.828 | 46,868 | 5.062 | 2.819 | 4175 | 4.379 | 2.847 | 0.683 *** | ||||
Fluidity_Rank(SIC2) | 51,043 | 5.333 | 2.860 | 46,868 | 5.372 | 2.853 | 4175 | 4.893 | 2.904 | 0.479 *** | ||||
Fluidity_Rank(SIC3) | 51,043 | 5.159 | 2.866 | 46,868 | 5.184 | 2.865 | 4175 | 4.875 | 2.862 | 0.309 *** | ||||
Pctcomp | 26,379 | 0.574 | 0.463 | 23,527 | 0.596 | 0.467 | 2852 | 0.392 | 0.380 | 0.204 *** | ||||
HHI | 65,762 | 638.656 | 547.131 | 61,063 | 631.404 | 539.674 | 4699 | 732.896 | 628.635 | −101.492 *** | ||||
Linguistic Measures | ||||||||||||||
FogIndex | 41,440 | 19.343 | 2.432 | 37,928 | 19.331 | 2.463 | 3512 | 19.468 | 2.059 | −0.137 ** | ||||
Words | 41,050 | 10.062 | 0.798 | 37,551 | 10.031 | 0.796 | 3499 | 10.389 | 0.745 | −0.358 *** | ||||
Kincaid | 41,440 | 15.295 | 2.126 | 37,928 | 15.273 | 2.144 | 3512 | 15.530 | 1.904 | −0.257 *** | ||||
Net_Tone | 65,752 | −0.370 | 0.165 | 61,053 | −0.371 | 0.165 | 4699 | −0.353 | 0.161 | −0.018 *** | ||||
Negative_Tone | 65,762 | 1.543 | 0.443 | 61,063 | 1.543 | 0.446 | 4699 | 1.537 | 0.413 | 0.006 | ||||
Positive_Tone | 65,762 | 0.683 | 0.176 | 61,063 | 0.680 | 0.176 | 4699 | 0.713 | 0.180 | −0.033 *** | ||||
Firm Characteristics | ||||||||||||||
Roa | 65,762 | −0.389 | 1.811 | 61,063 | −0.423 | 1.875 | 4699 | 0.049 | 0.123 | −0.472 *** | ||||
Size | 65,762 | 4.783 | 2.612 | 61,063 | 4.480 | 2.436 | 4699 | 8.719 | 1.303 | −4.238 *** | ||||
Tangibility | 65,762 | 0.251 | 0.232 | 61,063 | 0.244 | 0.231 | 4699 | 0.338 | 0.233 | −0.094 *** | ||||
Dividend | 65,762 | 0.342 | 0.474 | 61,063 | 0.310 | 0.462 | 4699 | 0.762 | 0.426 | −0.452 *** | ||||
Cash | 65,762 | 0.216 | 0.248 | 61,063 | 0.226 | 0.253 | 4699 | 0.085 | 0.097 | 0.141 *** | ||||
TobinsQ | 65,762 | 4.738 | 15.086 | 61,063 | 4.959 | 15.630 | 4699 | 1.864 | 1.163 | 3.095 *** | ||||
DEratio | 65,762 | 1.504 | 5.045 | 61,063 | 1.526 | 5.163 | 4699 | 1.222 | 3.104 | 0.304 *** | ||||
High_Inst | 65,762 | 0.529 | 0.499 | 61,063 | 0.506 | 0.500 | 4699 | 0.819 | 0.385 | −0.313 *** | ||||
High_Inst(SIC2) | 65,762 | 0.510 | 0.500 | 61,063 | 0.489 | 0.500 | 4699 | 0.782 | 0.413 | −0.293 *** | ||||
High_Inst(SIC3) | 65,762 | 0.494 | 0.500 | 61,063 | 0.475 | 0.499 | 4699 | 0.739 | 0.439 | −0.264 *** | ||||
Panel B: CDS−Traded Firms | Before CDS Initiation (a) | After CDS Initiation (b) | ||||||||||||
N | Mean | SD. | N | Mean | SD. | t-Test (a)−(b) | ||||||||
Competition Measures | ||||||||||||||
Fluidity | 2041 | 5.965 | 3.277 | 2134 | 5.961 | 3.245 | 0.004 | |||||||
Pctcomp | 1948 | 0.480 | 0.420 | 904 | 0.201 | 0.151 | 0.279 *** | |||||||
HHI | 2505 | 679.542 | 582.120 | 2194 | 793.814 | 672.832 | −114.272 *** | |||||||
Linguistic Measures | ||||||||||||||
FogIndex | 2247 | 19.284 | 1.913 | 1265 | 19.794 | 2.259 | −0.510 *** | |||||||
Words | 2239 | 10.324 | 0.674 | 1260 | 10.505 | 0.844 | −0.181 *** | |||||||
Kincaid | 2247 | 15.274 | 1.776 | 1265 | 15.985 | 2.036 | −0.711 *** | |||||||
Net_Tone | 2505 | −0.329 | 0.178 | 2194 | −0.381 | 0.134 | 0.052 *** | |||||||
Negative_Tone | 2505 | 1.420 | 0.418 | 2194 | 1.672 | 0.364 | −0.252 *** | |||||||
Positive_Tone | 2505 | 0.694 | 0.191 | 2194 | 0.736 | 0.164 | −0.043 *** | |||||||
Firm Characteristics | ||||||||||||||
Roa | 2505 | 0.049 | 0.153 | 2194 | 0.050 | 0.076 | −0.001 | |||||||
Size | 2505 | 8.284 | 1.296 | 2194 | 9.215 | 1.121 | −0.930 *** | |||||||
Tangibility | 2505 | 0.352 | 0.228 | 2194 | 0.322 | 0.237 | 0.030 *** | |||||||
Dividend | 2505 | 0.739 | 0.440 | 2194 | 0.789 | 0.409 | −0.050 *** | |||||||
Cash | 2505 | 0.073 | 0.101 | 2194 | 0.099 | 0.091 | −0.026 *** | |||||||
TobinsQ | 2505 | 2.057 | 1.438 | 2194 | 1.644 | 0.670 | 0.412 *** | |||||||
DEratio | 2505 | 1.004 | 2.087 | 2194 | 1.472 | 3.944 | −0.467 *** | |||||||
High_Inst | 2505 | 0.761 | 0.426 | 2194 | 0.885 | 0.319 | −0.124 *** | |||||||
High_Inst(SIC2) | 2505 | 0.742 | 0.438 | 2194 | 0.829 | 0.377 | −0.087 *** | |||||||
High_Inst(SIC3) | 2505 | 0.714 | 0.452 | 2194 | 0.768 | 0.423 | −0.054 *** |
Fama-French 17 Industries | Non-CDS-Traded | CDS-Traded | Total |
---|---|---|---|
Food | 1830 | 223 | 2053 |
Mining and Minerals | 995 | 70 | 1065 |
Oil and Petroleum Product | 3010 | 479 | 3489 |
Textiles, Apparel & Footwear | 1136 | 70 | 1206 |
Consumer Durables | 1729 | 109 | 1838 |
Chemicals | 1371 | 197 | 1568 |
Drugs, Soap, Perfumes, Tobacco | 3038 | 292 | 3330 |
Construction and Construction Materials | 2137 | 385 | 2522 |
Steel Works Etc. | 798 | 105 | 903 |
Fabricated Products | 530 | 39 | 569 |
Machinery and Business Equipment | 9517 | 666 | 10,183 |
Automobiles | 982 | 46 | 1028 |
Transportation | 2263 | 382 | 2645 |
Retail Stores | 3583 | 304 | 3887 |
Other | 28,144 | 1332 | 29,476 |
Total | 61,063 | 4699 | 65,762 |
(1) | (2) | (3) | |
---|---|---|---|
Fluidity | Pctcomp | HHI | |
Tradedpost | 0.5447 *** | 0.0435 ** | 55.8385 *** |
(0.114) | (0.019) | (19.336) | |
Roa | −0.1857 *** | 0.0355 ** | 0.3626 |
(0.028) | (0.017) | (0.668) | |
Size | 0.3818 *** | −0.0092 | −2.2701 |
(0.029) | (0.008) | (2.636) | |
Tangibility | 0.5328 *** | 0.0668 | −0.8344 |
(0.183) | (0.049) | (18.009) | |
Dividend | −0.0766 ** | −0.0108 | 1.3268 |
(0.037) | (0.010) | (5.704) | |
Cash | 0.7885 *** | 0.0416 | 10.6663 |
(0.110) | (0.034) | (8.366) | |
TobinsQ | 0.0212 *** | 0.0097 *** | −0.1020 |
(0.004) | (0.002) | (0.109) | |
DEratio | 0.0036 | 0.0011 | −0.1232 |
(0.003) | (0.001) | (0.256) | |
Firm FE | Yes | Yes | Yes |
Year FE | Yes | Yes | Yes |
Adj. R2 | 0.81 | 0.56 | 0.89 |
Observations | 51,043 | 26,379 | 65,762 |
(1) | (2) | (3) | (4) | |
---|---|---|---|---|
Fluidity | Fluidity (t + 1) | Fluidity (t + 2) | Fluidity (t + 3) | |
Tradedpost | 0.4018 *** | 0.4047 *** | 0.3563 ** | 0.3147 ** |
(0.143) | (0.144) | (0.141) | (0.140) | |
Roa | −0.8644 *** | −0.4733 ** | −0.1770 | −0.1619 |
(0.286) | (0.210) | (0.257) | (0.269) | |
Size | 0.3834 *** | 0.3105 *** | 0.2439 *** | 0.1755 * |
(0.091) | (0.088) | (0.093) | (0.098) | |
Tangibility | −0.2326 | −0.2856 | −0.0185 | 0.0685 |
(0.685) | (0.601) | (0.582) | (0.604) | |
Dividend | −0.2809 ** | −0.2089 * | −0.2227 * | −0.2329 ** |
(0.119) | (0.115) | (0.116) | (0.115) | |
Cash | 0.7619 | 0.7803 | 0.4540 | 0.3254 |
(0.598) | (0.592) | (0.589) | (0.569) | |
TobinsQ | 0.0496 *** | 0.0845 *** | 0.0836 *** | 0.0743 *** |
(0.016) | (0.018) | (0.014) | (0.016) | |
DEratio | 0.0056 | −0.0002 | −0.0087 ** | −0.0154 *** |
(0.007) | (0.005) | (0.004) | (0.004) | |
High_Inst(SIC3) | −0.2235 * | −0.3166 *** | −0.2893 *** | −0.2661 *** |
(0.115) | (0.106) | (0.102) | (0.101) | |
Firm FE | Yes | Yes | Yes | Yes |
Year FE | Yes | Yes | Yes | Yes |
Adj. R2 | 0.77 | 0.76 | 0.76 | 0.77 |
Observations | 7057 | 7327 | 6886 | 6486 |
(1) | (2) | (3) | |
---|---|---|---|
Fluidity | Fluidity | Fluidity | |
Tradedpost | 0.0879 | 0.1309 | 0.2312 |
(0.287) | (0.215) | (0.170) | |
High_Inst | −0.2983 *** | ||
(0.050) | |||
Tradedpost * High_Inst | 0.5213 * | ||
(0.287) | |||
High_Inst(SIC2) | −0.2683 *** | ||
(0.045) | |||
Tradedpost * High_Inst(SIC2) | 0.4960 ** | ||
(0.211) | |||
High_Inst(SIC3) | −0.2157 *** | ||
(0.041) | |||
Tradedpost * High_Inst(SIC3) | 0.3964 ** | ||
(0.170) | |||
Roa | −0.1832 *** | −0.1846 *** | −0.1852 *** |
(0.028) | (0.028) | (0.028) | |
Size | 0.3936 *** | 0.3933 *** | 0.3912 *** |
(0.029) | (0.029) | (0.029) | |
Tangibility | 0.5441 *** | 0.5330 *** | 0.5333 *** |
(0.183) | (0.183) | (0.183) | |
Dividend | −0.0840 ** | −0.0824 ** | −0.0821 ** |
(0.037) | (0.037) | (0.037) | |
Cash | 0.7896 *** | 0.7922 *** | 0.7900 *** |
(0.110) | (0.110) | (0.110) | |
TobinsQ | 0.0216 *** | 0.0214 *** | 0.0214 *** |
(0.004) | (0.004) | (0.004) | |
DEratio | 0.0030 | 0.0031 | 0.0032 |
(0.003) | (0.003) | (0.003) | |
Firm FE | Yes | Yes | Yes |
Year FE | Yes | Yes | Yes |
Adj. R2 | 0.81 | 0.81 | 0.81 |
Observations | 51,043 | 51,043 | 51,043 |
(1) | (2) | (3) | |
---|---|---|---|
FogIndex | Kincaid | Words | |
Tradedpost | 0.5712 *** | 0.5458 *** | 0.1208 *** |
(0.100) | (0.094) | (0.031) | |
Roa | 0.0155 | 0.0148 | −0.0291 *** |
(0.035) | (0.029) | (0.008) | |
Size | 0.0647 * | 0.0712 ** | 0.1041 *** |
(0.033) | (0.029) | (0.007) | |
Tangibility | 0.0036 | 0.0297 | −0.0655 |
(0.233) | (0.198) | (0.055) | |
Dividend | 0.0801 | 0.0745 | 0.0241 * |
(0.054) | (0.046) | (0.013) | |
Cash | 0.0676 | 0.0624 | −0.0188 |
(0.134) | (0.114) | (0.033) | |
TobinsQ | 0.0010 | 0.0012 | 0.0013 |
(0.006) | (0.005) | (0.001) | |
DEratio | 0.0044 | 0.0029 | 0.0030 *** |
(0.004) | (0.003) | (0.001) | |
High_Inst(SIC3) | 0.0729 | 0.0498 | −0.0353 *** |
(0.056) | (0.048) | (0.013) | |
Firm FE | Yes | Yes | Yes |
Year FE | Yes | Yes | Yes |
Adj. R2 | 0.21 | 0.24 | 0.38 |
Observations | 41,440 | 41,440 | 41,050 |
(1) | (2) | (3) | |
---|---|---|---|
Net_Tone | Negative_Tone | Positive_Tone | |
Tradedpost | 0.0144 * | 0.0241 | 0.0305 *** |
(0.007) | (0.018) | (0.008) | |
Roa | 0.0038 *** | −0.0123 *** | 0.0009 |
(0.001) | (0.002) | (0.001) | |
Size | −0.0095 *** | 0.0289 *** | −0.0012 |
(0.001) | (0.003) | (0.001) | |
Tangibility | −0.0048 | 0.0065 | 0.0009 |
(0.008) | (0.022) | (0.008) | |
Dividend | −0.0022 | −0.0182 *** | −0.0097 *** |
(0.002) | (0.006) | (0.002) | |
Cash | 0.0108 ** | 0.0326 ** | 0.0331 *** |
(0.005) | (0.014) | (0.005) | |
TobinsQ | 0.0002 ** | −0.0007 *** | 0.0001 |
(0.000) | (0.000) | (0.000) | |
DEratio | −0.0013 *** | 0.0052 *** | −0.0002 |
(0.000) | (0.000) | (0.000) | |
High_Inst(SIC3) | 0.0055 ** | −0.0084 | 0.0006 |
(0.003) | (0.007) | (0.003) | |
Firm FE | Yes | Yes | Yes |
Year FE | Yes | Yes | Yes |
Adj. R2 | 0.47 | 0.52 | 0.59 |
Observations | 65,752 | 65,762 | 65,762 |
(1) | (2) | (3) | (4) | (5) | (6) | |
---|---|---|---|---|---|---|
Net_Tone | Negative_Tone | Positive_Tone | FogIndex | Kincaid | Words | |
Tradedpost | −0.0052 | 0.0672 ** | 0.0139 | 0.9212 *** | 0.7783 *** | 0.1901 *** |
(0.014) | (0.029) | (0.016) | (0.196) | (0.184) | (0.051) | |
Tradedpost * High_Inst(SIC3) | 0.0256 * | −0.0562 * | 0.0215 | −0.4520 ** | −0.3003 | −0.0895 |
(0.013) | (0.029) | (0.016) | (0.202) | (0.188) | (0.055) | |
High_Inst(SIC3) | 0.0045 * | −0.0062 | −0.0002 | 0.0872 | 0.0594 | −0.0325 ** |
(0.003) | (0.007) | (0.003) | (0.057) | (0.048) | (0.014) | |
Roa | 0.0038 *** | −0.0123 *** | 0.0009 | 0.0155 | 0.0148 | −0.0291 *** |
(0.001) | (0.002) | (0.001) | (0.035) | (0.029) | (0.008) | |
Size | −0.0095 *** | 0.0288 *** | −0.0012 | 0.0644 * | 0.0711 ** | 0.1041 *** |
(0.001) | (0.003) | (0.001) | (0.033) | (0.029) | (0.007) | |
Tangibility | −0.0047 | 0.0063 | 0.0010 | 0.0025 | 0.0290 | −0.0657 |
(0.008) | (0.022) | (0.008) | (0.233) | (0.198) | (0.055) | |
Dividend | −0.0023 | −0.0180 *** | −0.0098 *** | 0.0812 | 0.0753 | 0.0244 * |
(0.002) | (0.006) | (0.002) | (0.054) | (0.046) | (0.013) | |
Cash | 0.0108 ** | 0.0325 ** | 0.0331 *** | 0.0666 | 0.0618 | −0.0190 |
(0.005) | (0.014) | (0.005) | (0.134) | (0.114) | (0.033) | |
TobinsQ | 0.0002 ** | −0.0007 *** | 0.0001 | 0.0010 | 0.0012 | 0.0013 |
(0.000) | (0.000) | (0.000) | (0.006) | (0.005) | (0.001) | |
DEratio | −0.0013 *** | 0.0052 *** | −0.0002 | 0.0043 | 0.0028 | 0.0029 *** |
(0.000) | (0.000) | (0.000) | (0.004) | (0.003) | (0.001) | |
Firm FE | Yes | Yes | Yes | Yes | Yes | Yes |
Year FE | Yes | Yes | Yes | Yes | Yes | Yes |
Adj. R2 | 0.47 | 0.52 | 0.59 | 0.21 | 0.24 | 0.38 |
Observations | 65,752 | 65,762 | 65,762 | 41,440 | 41,440 | 41,050 |
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Share and Cite
Hu, C.; Liu, M.; Jiang, W. The Effect of CDS Trading on Product Market Competition: Evidence from 10-K Filings. J. Risk Financial Manag. 2023, 16, 207. https://doi.org/10.3390/jrfm16030207
Hu C, Liu M, Jiang W. The Effect of CDS Trading on Product Market Competition: Evidence from 10-K Filings. Journal of Risk and Financial Management. 2023; 16(3):207. https://doi.org/10.3390/jrfm16030207
Chicago/Turabian StyleHu, Changjie, Ming Liu, and Weiyu Jiang. 2023. "The Effect of CDS Trading on Product Market Competition: Evidence from 10-K Filings" Journal of Risk and Financial Management 16, no. 3: 207. https://doi.org/10.3390/jrfm16030207