Product Market Competition and Overreaction to Intra-Industry Information Transfers

This study investigates the effect of product market competition on overreaction to intra-industry information transfers. Prior studies show that stock overreacts transfers resulting from earnings announcements early peer firms; however, few how occurs. reveals investors overreact more in higher competition. It also finds competitive environments, negative than they do positive The results imply not fully understand differential persistence between industry-wide and firm-specific news released by industry, which is consistent with functional fixation hypothesis. Additional analyses reveal less observed when firms are competitive: announcement bellwether or industries high sales growth. robust an alternative measure used. has academic practical implications, showing can lead mispricing context