Publications

Journal Article

Most studies of responses to change in competitive environments focus on competitor-specific adaptations. However, rivals are often acutely aware of one another, and this awareness should influence their competitive behavior.

In this study, the authors focus on three market structures that affect competitive behavior: competitive parity, status disparity, and multipoint contact.

In particular, the authors examine how securities analysts responded to a regulatory discontinuity, Regulation Fair Disclosure (Reg-FD), which promoted competitive parity by eliminating privileged access to proprietary firm information as a critical source of competitive advantage.

The authors predict and find that Reg-FD activated mutual forbearance among analysts linked through multipoint contact. The authors also predict and find that high-status analysts forbear more strongly.

Analysts’ responses to heterogeneity in competitive advantage thus depend importantly on their competitive overlap and status, with notable implications for their behavior and the information they provide to investors.