The Relationship between Product Market Competition and Stock Returns in Tehran Stock Exchange Companies

Abstract

The main purpose of this paper is to examine the efficiency of competitive product market shares in listed companies in Tehran Stock Exchange. Competition criteria in this study included "industry concentration", "replacement the goods", "market size", "Index-Q Tobin," "barriers to entry" (capital intensity). Therefore, a sample of 87 companies during the years 2003 to 2011 were examined. The results showed that there was a significant negative relation between industry concentration, the substitute goods, market size and index - Q Tobin with stock returns. However, there is no significant relationship between stock returns and barriers to entry. The results of this study indicate that firms with high competitiveness earn low efficiency.