TY - JOUR
T1 - Do industry-level analyses improve forecasts of financial performance
AU - Fairfield, Patricia M.
AU - Ramnath, Sundaresh
AU - Yohn, Teri Lombardi
PY - 2009/3/1
Y1 - 2009/3/1
N2 - 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;
AB - 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;
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U2 - 10.1111/j.1475-679X.2008.00313.x
DO - 10.1111/j.1475-679X.2008.00313.x
M3 - Article
AN - SCOPUS:58649085038
VL - 47
SP - 147
EP - 178
JO - Journal of Accounting Research
JF - Journal of Accounting Research
SN - 0021-8456
IS - 1
ER -