Are the Best Small Companies the Best Investments?
DOI
10.1111/1475-6803.t01-1-00002
Abstract
Previous research finds that large companies previously judged to be excellent growth companies have subsequently been poor investments. We examine small companies selected by Business Week on the basis of multiple criteria used in annual articles featuring highly rated growth companies. We study the investment performance over the three years before eleven annual Business Week publications and the three years after publication. We find positive excess returns in the pre-publication period, but negative excess returns in the post-publication period. This reversal in investment performance appears to be due to a mean-reversion tendency in operating performance, in which the earnings and the past rates of return on capital of such companies subsequently decrease significantly.
Document Type
Restricted Article: Campus only access
Publication Date
8-9-2002
Publisher Statement
Copyright © 2002, Wiley.
DOI: https://doi.org/10.1111/1475-6803.t01-1-00002
The definitive version is available at: https://onlinelibrary.wiley.com/doi/full/10.1111/1475-6803.t01-1-00002
Recommended Citation
Bauman, W. Scott, Conover, Mitchell and R. Cox, Don. 2002. "Are the Best Small Companies the Best Investments?" Journal of Financial Research 25 (2): 169-186. https://doi.org/10.1111/1475-6803.t01-1-00002
