Do industry-level analyses improve forecasts of financial performance

Patricia M. Fairfield, Sundaresh Ramnath, Teri Lombardi Yohn

Research output: Contribution to journalArticlepeer-review

51 Scopus citations


Prior research documents mean reversion in firm profitability and growth under the implicit assumption that profitability and growth of all firms revert to a common benchmark at the same rate. However, a large body of academic research suggests that there are systematic interindustry differences (e.g., industry barriers to entry) that differentially affect firm performance based on industry membership. We evaluate the relative forecast accuracy of mean reverting models at the industry and economywide levels and find that industry-specific models are generally more accurate in predicting firm growth but not profitability. Copyright;

Original languageEnglish (US)
Pages (from-to)147-178
Number of pages32
JournalJournal of Accounting Research
Issue number1
StatePublished - Mar 2009

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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