Farokh Barzideh; Seyed Mostafa Hasanzadeh Diva
Abstract
According to economic theory, industry-wide component of firm performance is more persistent than the firm- specific component. This paper provided evidence on this assertion and examines the relative persistence of industry-wide profit and firm-specific profit. For this purpose the information of 135 ...
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According to economic theory, industry-wide component of firm performance is more persistent than the firm- specific component. This paper provided evidence on this assertion and examines the relative persistence of industry-wide profit and firm-specific profit. For this purpose the information of 135 companies from 12 industries in the years 1386 to 1393 were used. Consistent with the predictions the results showed that the industry-wide profit is remarkably more persistent than firm-specific profit. Also the industry-wide profit and the firm-specific profit were analyzed to cash flow and accruals. The study of these four components showed that the industry-wide cash flow was the most persistent component and the firm-specific accruals is the least persistent. Moreover the whole industry was divided into two groups of similar and dissimilar and the persistence of industry-wide profit and firm-specific profit were examined in the groups. As a result the industry-wide profit in similar group was more persistent than that in dissimilar group. In addition similarity or dissimilarity has no effect on persistence of firm-specific profit.
