Product Market Competition and Strategic Disclosure of Industrial Segment-Level Information

This study examines how several determinants of industry product market competition—product substitutability, market size, and entry costs—affect managers’ strategic disclosure of industrial segment-level information. I find evidence of an inverted U-shaped relation between competition and managerial disclosure of segment-level research and development expenditure. Competition is insignificantly (negatively) related to the likelihood of managers disclosing segment-level number of employees at low (high) competition levels. Competition is insignificantly related to disclosure of the segment-level number of employees. The study also finds that a firm’s market share interacts with competition in the industry to influence managerial disclosure. When a firm’s market share increases, managerial disclosure of segment-level information also increases, with this relation becoming stronger at higher competition levels. This study contributes to the literature by showing that the nature of product market competition and a firm’s competitive position in an industry are important determinants of industrial segment-level disclosure. JEL Classifications: D4; L1; M40; M41.