Research on product market competition and risk of assets

Aguerrevere (2009) links the product demand, product market competition and risk of assets, then reveals the relationship between the three factors; This paper is based on objective facts, using the evidences from the A share listed companies Chinese for empirical study, in order to reveal the relationship between these factors in real world. The results of the empirical study show: when the demand is high, increased demand at higher levels, the risks of assets decease as the demand rises, therefore the risks of assets in high demand are significantly lower than low levels of demand; when demand is low, firms in more competitive industries have greater risk of assets than firms in less competitive industries; whereas when demand is high, firms in less competitive industries have greater risks of assets than firms in more competitive industries. The empirical study results are consistent with the theoretical conclusion in Aguerrevere´s (2009) paper. Finally, according to our study, we give some suggestions to investors, firms and department of economic management respectively.