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Modeling the competitive process

Author

Listed:
  • Robert Jacobson

    (School of Business Administration, University of Washington, Seattle, WA, USA)

  • Gary Hansen

    (School of Business Administration, University of Washington, Seattle, WA, USA)

Abstract

Understanding the behavior of markets requires understanding not just the level of return but also its dynamics. The speed at which abnormal returns dissipate is one useful indicator of the competitive process. We model for US and Japanese firms the process of competition as reflected in the persistence of abnormal returns. While we find a similar aggregate distribution of firm persistence in both countries, we observe cross-national differences manifesting themselves in terms of inter-country differences in industry persistence. We find that both industry- and firm-specific factors influence firm persistence. Copyright © 2001 John Wiley & Sons, Ltd.

Suggested Citation

  • Robert Jacobson & Gary Hansen, 2001. "Modeling the competitive process," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 22(4-5), pages 251-263.
    • Handle: RePEc:wly:mgtdec:v:22:y:2001:i:4-5:p:251-263
    DOI: 10.1002/mde.1020
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    References listed on IDEAS

    as
    1. Kormendi, Roger & Lipe, Robert, 1987. "Earnings Innovations, Earnings Persistence, and Stock Returns," The Journal of Business, University of Chicago Press, vol. 60(3), pages 323-345, July.
    2. Richard R. Nelson, 1995. "Recent Evolutionary Theorizing about Economic Change," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 48-90, March.
    3. Fisher, Franklin M & McGowan, John J, 1983. "On the Misuse of Accounting Rates of Return to Infer Monopoly Profits," American Economic Review, American Economic Association, vol. 73(1), pages 82-97, March.
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    Cited by:

    1. Adnan Abo Al Haija, 2025. "The dynamics of firms' abnormal earnings and the growth differential between market and book value of equity," Journal of Asset Management, Palgrave Macmillan, vol. 26(6), pages 596-614, October.
    2. Tarziján, Jorge & Brahm, Francisco & Daiber, Luis Felipe, 2008. "Entrepreneurial profitability and persistence: Chile versus the U.S.A," Journal of Business Research, Elsevier, vol. 61(6), pages 599-608, June.
    3. Juan Carlos Bou & Albert Satorra, 2003. "The persistence of abnormal returns at industry and firm levels," Economics Working Papers 729, Department of Economics and Business, Universitat Pompeu Fabra.

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