Competition Culture and Corporate Finance

“I highly recommend ‘Competition Culture and Corporate Finance’ to anyone interested in understanding the role of corporate culture in the field of finance. Dr. Terry Harris provides valuable insights into the impact of competition culture on various phenomena in corporate finance, including stock return performance, idiosyncratic stock price crash risk, meeting/beating analysts’ earnings expectations, and earnings management activity. The findings have significant policy implications and will be of interest to regulators, accounting standard-setters, managers, and those charged with firm governance.” — Laurence Ferry, Professor of Accounting, Durham University, United Kingdom “If you’re interested in understanding the complex relationship between corporate culture, competition, and financial outcomes, then Dr. Terry Harris’s book, ‘Competition Culture and Corporate Finance,’ is a must-read. Using innovative methods like natural language processing (NPL) and textual analysis of firms’ 10-K filings, Dr. Harris provides an insightful and detailed analysis of the impact of competition culture on various phenomena in corporate finance. The book’s findings shed light on critical issues like institutional ownership structure, stock return performance, idiosyncratic stock price crash risk, meeting/beating analysts’ earnings expectations, and earnings management activity.” — Omneya Abdelsalam, Professor of Accounting & Finance, Durham University, United Kingdom This book introduces a measure of firms’ competition culture based on a textual analysis and natural language processing (NPL) of firms’ 10-K filings. Using this measure, the book explores the relationship between competition culture and various phenomena in corporate finance, specifically, institutional ownership structure, stock return performance, idiosyncratic stock price crash risk, meeting/beating analysts’ earnings expectations, earnings management activity, andlending activity, for a large sample of US-based financial and non-financial firms. The findings of the book have significant policy implications and will be of interests to regulators, accounting standard-setters, managers and those charged with firm governance, career academics and researchers, graduates, and those generally interested in the role played by corporate culture in the related fields of finance, economics, and accounting. Terry Harris is an Associate Professor at Durham University Business School, Durham University, United Kingdom. This book introduces a measure of firms’ competition culture based on a textual analysis and natural language processing (NPL) of firms’ 10-K filings. Using this measure, the book explores the relationship between competition culture and various phenomena in corporate finance, specifically, institutional ownership structure, stock return performance, idiosyncratic stock price crash risk, meeting/beating analysts’ earnings expectations, and earnings management activity, for a large sample of US-based financial and non-financial firms. In particular, the book provides evidence that transient institutional ownership intensifies firms’ competition culture, while dedicated institutional ownership lessens it. In addition, the book’s findings suggest that firms with greater levels of competition culture achieve higher levels of short-term stock return performance, experience greater incidence of idiosyncratic stock price crashes, and are more prone to meet/beat analysts forecast and engagein accruals-based earnings manipulation. Finally, the book examines the role played by competition culture in financial firms (i.e., banks). Specifically, the book explores the effect of competition culture on bank lending and shows that banks with greater levels of competition culture are generally more prone to engage in procyclical lending activity. The findings of the book have significant policy implications and will be of interests to regulators, accounting standard-setters, managers and those charged with firm governance, career academics and researchers, graduates, and those generally interested in the role played by corporate culture in the related fields of finance, economics, and accounting.