A Text-Based Competition Network: The Perspective of Information Disclosure

This paper utilizes nonfinancial information disclosure to develop a measure of text-based competition network. Using the data of China's listed firms, the authors adopt the textual analysis method to identify a unique group of competitors for the focal firm and construct the text-based competition network. In the whole network, leading firms receive increasing attention from competitors, and they play a vital role for the dynamic changes in the whole market. Moreover, the interactions between the focal firm and competitors in the text-based competition network are shown by some financial indicators. The characteristics of the text-based competition network have a significant impact on the future performance of the focal firm. Finally, economic links in the competition network are discussed by varying the number of competitors, which shows the impact of various competitors on economic similarities. The text-based competition network shows the relative importance of competitors for the focal firm and explains firms' decision-making from the perspective of dynamic competition.