Evaluating the profits response in companies with heterogeneous business strategies

This study examines the reaction of profits in companies with different and heterogeneous strategies in business. Accordingly, the company's response rate is compared with adopting cost-management business strategies and companies that adopt business differentiation strategies versus profit declarations. The profit declaration survey has been performed using structural failure equations. The necessity of using structural failure equations is to solve the probable structural failure points due to the downside of the reaction of profit. The research sample includes 43 companies adopting cost leadership strategies and 88 companies with differentiated business acquisition strategies during the period from 2009 to 2015. The Eviews is used to investigate research hypothesis. Evidence from the present study suggests that companies pursuing cost leadership strategies, declare their profits publicly than companies that have differentiated methods, with better changes in corporate earnings declarations to users of financial information. As a result, companies that pursue differentiation strategies are subject to heterogeneous interpretations and fewer changes in investor beliefs. Also, the results of structural failure equations indicate a bullish profitability continuity in companies by adopting business leadership strategies.