Industry concentration and average stock returns
Publication
, Journal Article
Hou, K; Robinson, DT
Published in: Journal of Finance
August 1, 2006
Firms in more concentrated industries earn lower returns, even after controlling for size, book-to-market, momentum, and other return determinants. Explanations based on chance, measurement error, capital structure, and persistent in-sample cash flow shocks do not explain this finding. Drawing on work in industrial organization, we posit that either barriers to entry in highly concentrated industries insulate firms from undiversifiable distress risk, or firms in highly concentrated industries are less risky because they engage in less innovation, and thereby command lower expected returns. Additional time-series tests support these risk-based interpretations.
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Published In
Journal of Finance
DOI
EISSN
1540-6261
ISSN
0022-1082
Publication Date
August 1, 2006
Volume
61
Issue
4
Start / End Page
1927 / 1956
Related Subject Headings
- Finance
- 3801 Applied economics
- 3502 Banking, finance and investment
- 1502 Banking, Finance and Investment
Citation
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Chicago
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MLA
NLM
Hou, K., & Robinson, D. T. (2006). Industry concentration and average stock returns. Journal of Finance, 61(4), 1927–1956. https://doi.org/10.1111/j.1540-6261.2006.00893.x
Hou, K., and D. T. Robinson. “Industry concentration and average stock returns.” Journal of Finance 61, no. 4 (August 1, 2006): 1927–56. https://doi.org/10.1111/j.1540-6261.2006.00893.x.
Hou K, Robinson DT. Industry concentration and average stock returns. Journal of Finance. 2006 Aug 1;61(4):1927–56.
Hou, K., and D. T. Robinson. “Industry concentration and average stock returns.” Journal of Finance, vol. 61, no. 4, Aug. 2006, pp. 1927–56. Scopus, doi:10.1111/j.1540-6261.2006.00893.x.
Hou K, Robinson DT. Industry concentration and average stock returns. Journal of Finance. 2006 Aug 1;61(4):1927–1956.
Published In
Journal of Finance
DOI
EISSN
1540-6261
ISSN
0022-1082
Publication Date
August 1, 2006
Volume
61
Issue
4
Start / End Page
1927 / 1956
Related Subject Headings
- Finance
- 3801 Applied economics
- 3502 Banking, finance and investment
- 1502 Banking, Finance and Investment