TPP--Technological Peer Pressure

Cao, Ma, Tucker, and Wan (2018), 'Technological Peer Pressure and Product Disclosure', The Accounting Review, Vol 93 (6), pp 95-126. Download the reference here

Variable Definition

$$TPP = log(1+\frac{\sum_{j \ne i}\omega_{ij}\times G_{j,t}}{G_{j,t}})$$ where $j$ represents firm $i$’s rival (any firm that overlaps with firm $i$ in the product markets), $t$ represents the fiscal year, $G$ is a firm’s R&D stock, and $\omega_{ij}$ is the closeness weight. Specifically, $G$ is a firm’s cumulative R&D investments in preceding years with the value of investments decaying by 15% as each year passes, i.e., $G_t = RND_t + (1-0.15)G_{t-1}$, where $RND_t$ is the firm’s R&D expenses in year $t$. $\omega_{ij}$ captures the spatial distance in the product markets between firms $i$ and $j$ using industry segment sales: $$\omega_{ij} \equiv cos(\theta_{ij}) = \frac{V_i}{\parallel V_i \parallel} \cdot \frac{V_j}{\parallel V_j \parallel}$$ where $V_{i}$ is the vector of firm $i$’s sales with the $k^{th}$ element being the share of firm $i$’s total sales in the preceding two years made in industry (4-digit SIC) $k$. A higher value of TPP indicates more intense competition faced by the sample firm.

TPP Measure Data

• Data format: STATA .dat file

• Data coverage: Fiscal years 1990-2024 (partial)

• Frequency: Firm-year

• Variables: GVKEY, FYEAR (fiscal year), TPP, and two components of TPP

• G: $$G_{j,t}$$

• sumG_sales: $$\sum_{j \ne i}\omega_{ij}\times G_{j,t}$$

  Download TPP Data Here