Are Competitors Advantageous Or Disadvantageous in Consolidated Versus Fragmented Industries‪?‬

ABSTRACT We contend that competitors may be mutually disadvantageous in fragmented industries. Consequently, we expect that announcements of firm distress will be associated with positive implications for non-distressed competitors in fragmented industries. Alternatively we speculate that, in consolidated industries, rivals may be advantageous because they may offer net mutual benefits to each other. Thus, we predict that the announcement of distress by a firm in a consolidated industry will be received as negative news by its rivals since the contribution of that firm to the industry may cease. We utilize the event-study methodology to empirically test our hypotheses.