Product Market Threats: Implications for Future Performance and Use by Market Participants
研究用产品市场流动性衡量竞争威胁，发现其与未来盈利和现金流负相关，且资本市场未充分反映此信息，导致可预测的股票回报和分析师预测误差。
ABSTRACT This study examines whether competition in the form of emerging threats from rivals' overlapping product strategies has explanatory power for future performance and volatility, beyond existing competition measures and firm life cycle proxies. We proxy for emerging threats using product market fluidity, which captures competitive pressures and instability arising from rivals' evolving product overlap. Specifically, higher fluidity (i.e., higher product market threats) is negatively associated with future profitability and operating cash flows and positively associated with the variability of future profitability and operating cash flows. We also find fluidity is negatively associated with future asset turnover, margins, and expenses, and only moderately positively associated with future sales, shedding light on the mechanisms through which product market threats manifest in future performance. However, capital market participants do not fully incorporate this information, leading to predictable future stock returns and analyst forecast errors. Overall, our findings suggest that the dynamism and fluidity in a firm's product market space convey valuable and distinct information to capital market participants.