The Performance of US Corporations: 1981–1994

Abstract

This study decomposes the performance of US public firms between 1981 and 1994 into year, industry, corporate‐focus and firm effects. Performance is measured by Tobin’s q, accounting profitability, and a hybrid measure. The results show that firm effects were more important to performance than industry effects, although industry effects had a large permanent component. Corporate focus was not important. The stylized facts suggest that competitive advantages – that is, differences between direct competitors in the same industry – were at least as important as industry influences on performance. Industry influences were more predictable and sustainable than competitive advantages, however.

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