On the existence of persistently outperforming firms

Abstract

This study analyses persistence in growth rates for a data set of manufacturing firms of all sizes. Previous quantile autoregressions of firm growth rates show that extreme growth events are likely to be negatively correlated over time, thus questioning the existence of persistent outperformers. By supplementing the quantile regression analyses with transition probability matrices, our study shows that "bouncing" firms coexistwith persistent outperformers. This result is shownto be robust for all size classes as well as for the exclusion of firms who experienced acquisitions or spin-offs.