Strategic Entry Decisions, Accounting Signals, and Risk Management Disclosure

• 成果类型: Article
• 署名作者: Zou, Youli
• 署名单位: University of Connecticut
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1111/1911-3846.12803
• 发表日期: 2022
• 页码: 2338-2375
• 关键词: price dispersion; CORPORATE DISCLOSURE; PROPRIETARY COSTS; empirical-model; VALUE-RELEVANCE; INFORMATION; COMPETITION; FIRMS; EXIT; association

摘要

This study provides evidence that hedge accounting information under Statement of Financial Accounting Standards (SFAS) 133, Accounting for Derivative Instruments and Hedging Activities, is related to rivals' market entry decisions. Documenting accounting information's relevance to competition decisions requires context-specific settings. Using data for the airline industry in the United States, I predict and find that entrants are less likely to enter routes in which incumbents report higher accumulated other comprehensive income from fuel hedging, an indication of lower future operating costs. As predicted, this relation is stronger after the adoption of SFAS 161, Disclosure about Derivative Instruments and Hedging Activities, in 2008, a systemic shock that significantly increases risk management disclosure requirements. The findings illustrate the product market relevance of hedge accounting signals and disclosure in the US airline industry and extend the understanding of SFAS 133 and SFAS 161 beyond the capital markets.