Mitigating industry contagion effects from financial reporting fraud: A competitive dynamics perspective of non-errant rival firms exploiting product-market opportunities

• Main Authors: KANG, Eugene, THOSUWANCHOT, Nongnapat, GOMULYA, David
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2023
• Subjects: Available slack; competitive dynamics; contagion; financial reporting fraud; resource deployment; Business Law, Public Responsibility, and Ethics; Finance and Financial Management; Strategic Management Policy
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/6884; https://ink.library.smu.edu.sg/context/lkcsb_research/article/7883/viewcontent/MitigatingIndustryContagion_2021_av.pdf
• Institution: Singapore Management University

Existing studies show that financial reporting frauds by errant firms cause declines in stock market valuations for non-errant rival firms (i.e. industry contagion effects). We posit that contagion effects may be mitigated by investors’ expectations of non-errant rivals exploiting product-market opp...