Do Some Firms Persistently Outperform ?
Source: Scuola Superiore Sant'Anna
This paper analyses persistence in growth rates of the entire population of Dutch manufacturing firms. Previous literature on firm growth rates shows that extreme growth events are likely to be negatively correlated over time. A rebound effect following an extreme growth event questions the existence of persistent outperformers, indicated by a positive correlation over time. By supplementing the quantile regression analyses with transition probability matrices, this paper shows that 'Bouncing' firms co-exist with persistent outperformers. This result is robust if one exclude firms involved in acquisitions or spin offs. Differentiating among different size classes, the authors find that the existence of persistent outperformers is especially pronounced in micro firms.