Fabian Hollstein, Marcel Prokopczuk, Christoph Matthias Würsig
{"title":"Market power and systematic risk","authors":"Fabian Hollstein, Marcel Prokopczuk, Christoph Matthias Würsig","doi":"10.1111/fima.12438","DOIUrl":null,"url":null,"abstract":"<p>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.</p>","PeriodicalId":48123,"journal":{"name":"Financial Management","volume":"53 2","pages":"233-266"},"PeriodicalIF":2.9000,"publicationDate":"2023-11-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://onlinelibrary.wiley.com/doi/epdf/10.1111/fima.12438","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Financial Management","FirstCategoryId":"96","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1111/fima.12438","RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
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.
期刊介绍:
Financial Management (FM) serves both academics and practitioners concerned with the financial management of nonfinancial businesses, financial institutions, and public or private not-for-profit organizations.