Rivals'Negative Earnings Surprises:One Loss All Loss or Wane and Wax
We utilize a sample of A-share listed companies from 2011 to 2021.Specifically,we focus on the negative earnings surprises of highly-concentrated monopoly industries as key events and examine the impact on other companies within the same industry in a bid to ex-plore the impact of market response from the focus firms.Our findings indicate that,among the monopoly industries,within two days when the rivals'negative earnings surprises occurred(that is,the day the rival disclosed the earnings announcement and the following day),as the cumulative excess returns of the focus firms manifest noticeably positive,the larger the rivals'negative earnings surprises,the higher cumula-tive excess returns of the focus firms,demonstrating the remarkable competitive effect of the rivals'negative earnings surprises within the industries.The further study finds that the product substituability and the resemblance degree between focus firms and the rivals are increas-ing in the positive spillovers while the sectoral growth plays a significant moderating role in this aspect.
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