This study examines how product market competition affects firms’ disclosures of their individual segment's performance. We explicitly account for different types of product market competition by distinguishing between competitors who are already active in a particular market and potential competitors who are considering entering the market. Arguably, firms that are subject to intensive existing competition have lower incentives to conceal information because they are less likely to exhibit abnormal profitability. By contrast, a high level of potential competition constitutes a threat to profitability and hence provides incentives to conceal segment performance. In line with these proprietary cost arguments, we find that potential competition is negatively associated with the disclosure of cross-segment differences in performance, whereas existing competition is positively associated with the disclosure of cross-segment differences in performance. Our results remain robust to a number of sensitivity tests.

中文翻译：

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产品市场竞争与企业对跨部门业绩差异的披露

本研究考察了产品市场竞争如何影响公司对其个别部门业绩的披露。我们通过区分已经活跃于特定市场的竞争对手和正在考虑进入市场的潜在竞争对手，明确解释了不同类型的产品市场竞争。可以说，受到激烈现有竞争的公司隐瞒信息的动机较低，因为它们不太可能表现出异常的盈利能力。相比之下，高水平的潜在竞争对盈利能力构成威胁，因此提供了隐瞒细分市场业绩的动机。根据这些专有成本论点，我们发现潜在竞争与披露跨部门绩效差异呈负相关，而现有的竞争与披露跨部门绩效差异呈正相关。我们的结果在许多敏感性测试中仍然稳健。