February 1999
Article
Review of Economics and Statistics

The Persistence of Shocks to Profitability

By: Anita M. McGahan and Michael E. Porter

Format:Print
| Pages:11

Abstract

In this study, we use data for 1981 through 1994 on a large sample of U.S. companies to examine the persistence of incremental industry, corporate-parent, and business-specific effects on profitability. Our results indicate that the incremental effects of industry on profitability persist longer than the incremental effects of the corporate parent and of the specific business. Changes in industry structure have a more persistent impact on profitability than do changes in firm structure.

Keywords

Profit; System Shocks; Strategy

Citation

McGahan, Anita M., and Michael E. Porter. "The Persistence of Shocks to Profitability." Review of Economics and Statistics 81, no. 1 (February 1999): 143–153.