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Profit Persistence in the "Very" Long Run: Evidence from Survivors and Exiters

One of the main shortcomings of the profit persistence literature is the fact that it looks only at surviving companies. This paper uses a unique dataset to analyze profit persitstence in two different stationary series: 85 surviving US companies from 1950-1999 and 72 exiters. While the exiters perform more competitive than the survivors there is still significant evidence for persitstence in both samples. Concentration and growth of the industry as well as size and volatility of profits seem to play an important role in explaining persistence.

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File URL: http://homepage.univie.ac.at/Papers.Econ/RePEc/vie/viennp/vie0401.pdf
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Paper provided by University of Vienna, Department of Economics in its series Vienna Economics Papers with number 0401.

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Date of creation: Feb 2004
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Handle: RePEc:vie:viennp:0401
Contact details of provider: Web page: http://www.univie.ac.at/vwl

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  12. Jesus Crespo Cuaresma & Adelina Gschwandtner, 2006. "The competitive environment hypothesis revisited: non-linearity, nonstationarity and profit persistence," Applied Economics, Taylor & Francis Journals, vol. 38(4), pages 465-472.
  13. Geroski, Paul A & Jacquemin, Alexis, 1988. "The Persistence of Profits: A European Comparison," Economic Journal, Royal Economic Society, vol. 98(391), pages 375-89, June.
  14. Brock, William A. & Hommes, Cars H., 1998. "Heterogeneous beliefs and routes to chaos in a simple asset pricing model," Journal of Economic Dynamics and Control, Elsevier, vol. 22(8-9), pages 1235-1274, August.
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  17. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
  18. Blume, Lawrence & Easley, David, 1992. "Evolution and market behavior," Journal of Economic Theory, Elsevier, vol. 58(1), pages 9-40, October.
  19. Tanaka, Yasuhito, 2000. "A finite population ESS and a long run equilibrium in an n players coordination game," Mathematical Social Sciences, Elsevier, vol. 39(2), pages 195-206, March.
  20. Kliger, Doron & Levy, Ori & Sonsino, Doron, 2003. "On absolute and relative performance and the demand for mutual funds--experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 52(3), pages 341-363, November.
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