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The persistence of abnormal returns
Abstract
The time‐series behavior of ROI is examined to assess a central element of competitive markets, the lack of persistence of abnormal profits. The analysis first determines the aggregate dynamic process of ROI and then examines how strategic and market factors influence this process. Consistent with abnormal returns resulting from a disequilibrium phenomenon, a mean reverting time‐series process approximates the behavior of ROI. While a variety of factors influence the persistence of return, the conditions under which market forces do not drive return back to its competitive rate seem remote, if present at all. Nonetheless, these factors can insulate a firm from competitive forces and so result in longer‐term abnormal profits.
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Citations
Cited by
Firm Resources and Sustained Competitive Advantage
Barney, J. (1991) · Journal of Management · doi:10.1177/014920639101700108 · Cited by 48,334
“Some authors have suggested that a sustained competitive advantage is simply a competitive advantage that lasts a long period of calendar time (Jacobsen, 1988; Porter, 1985).”
BackgroundStrategic assets and organizational rent
Amit, R., & Schoemaker, P. J. H. (1993) · Strategic Management Journal · doi:10.1002/smj.4250140105 · Cited by 8,425
Corporate reputation and sustained superior financial performance
Roberts, P. W., & Dowling, G. R. (2002) · Strategic Management Journal · doi:10.1002/smj.274 · Cited by 2,926
Wade, M., & Hulland, J. (2004) · MIS Quarterly · doi:10.2307/25148626 · Cited by 2,822
Metadata
- Authors
- Jacobsen, R.
- Venue
- Strategic Management Journal
- Publisher
- Wiley
- Published
- 1988-09
- Volume
- 9
- Issue
- 5
- Pages
- 415-430
- ISSN
- 0143-2095 (ISSN-L)
- 1097-0266
- OpenAlex
- W2073362134
- Cited by
- 347
- References
- 0
- FWCI
- 8.79
- Type
- journal article
- Language
- en
- Open access
- closed
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Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
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