Religion plays a significant role as an institutional framework shaping economic attitudes and behaviors. Previous studies have examined the impact of religion on various corporate decisions, including financial reporting, managerial compensation, and social responsibilities (Longenecker et al, 2004; Dyreng et al, 2012). Prior studies also find a significant relationship between perceived competition and firm performance (Li et al, 2013). Building on this literature, I investigate the impact of the level of religiosity in the county where firms are headquartered on the perceived competition of the firm, as indicated by competition-related words in 10-K filings. I find a negative relationship between religiosity and perceived competition. While exploring the underlying reasons, I find that firms headquartered in regions with high religious adherence tend to be more optimistic compared to those in regions with low religious adherence. This association also has a negative impact on R&D expenditures. Additionally, I find that this relationship negatively affects firm performance, especially during a financial crisis. The results remain robust when using the matched sample, entropy balancing, county fixed effects to control for potentially correlated variables, and other alternative specifications. I contribute to the accounting literature by highlighting how religiosity affects a firm’s competition decisions and firm performance.