The Effect of Market Competition on the Profit Quality of Homogeneous and Non-homogeneous Industries (Case study: Companies listed on the Tehran Stock Exchange)

The main purpose of this study is to evaluate the effect of competition in the product market on the quality of profits of homogeneous and non-homogeneous industries of companies listed on the Tehran Stock Exchange. The research sample is selected from 245 companies during the years 2007-2018, which have been divided into two groups based on product market competition and homogeneity. To test the hypotheses, according to the results of Hassmann and Broch-Pagan tests and the existence of serial self-correlation, the combined data model with random effects is selected and the generalized method of integrated PGLM data is used to estimate. The research findings indicate that the higher the concentration in the product market, the lower the quality of profit. Also, companies that compete in concentrated industries but in a homogeneous environment are more competitive than companies that compete in concentrated industries and heterogeneous environments, and have higher levels of profit quality than companies that compete in a heterogeneous environment.