This paper analyzes how customers' social preference (SP) affects firm value and performance through product market competition. We construct a score measuring a firm's effort of catering to customers' social preference and find it is positively related to firm value in competitive industries...

We model the interaction between product market competition and internal governance at firms. Competition makes it more difficult to infer a manager's action given the realized output, thus increasing the cost of inducing effort. An exogenous change in the incentive to shirk increases managerial...