The Distribution of Performance Data: Consistent Evidence of (Extreme) Negative Outcomes

Martin Albæk, Torben Juul Andersen

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All firms operating in the global economy are exposed to a multitude of risks including financial crisis, cyberattack, social instability, governance failure, extreme weather events, etc. As a consequence, international organizations assume many (new and evolving) exposures that must be addressed, where some firms are able to adjust and thrive against these adverse odds, whereas many others fail. It appears like some (a few) firms are able to repeatedly outperform the market, where a great many of them struggle, and quite a few register negative returns every year. As a consequence, the authors typically observe leptokurtic negatively skewed distributions of financial returns with extreme negative tails of poor performing firms, where the performance data fall way beyond the requirements of a normal distribution. The authors investigate this phenomenon based on a comprehensive dataset of European firms retrieved from Compustat Global for the 25-year period 1995–2019. The analysis shows that there is indeed a consistent pattern of many underperforming firms across different industry classifications and time intervals and a few outperformers. This provides evidence of a regularly observed phenomenon that often is overlooked in mainstream management studies. The results have implications for academic research that often relies on assumptions of data normality in statistical analysis and for corporate management that has to deal with a risk-prone business environment.
Original languageEnglish
Title of host publicationStrategic Responses for a Sustainable Future : New Research in International Management
EditorsTorben Juul Andersen
Number of pages28
Place of PublicationBingley
PublisherEmerald Group Publishing
Publication date2021
ISBN (Print)9781800719309
ISBN (Electronic)9781800719293, 9781800719316
Publication statusPublished - 2021
SeriesEmerald Studies in Global Strategic Responsiveness


  • Adaptation
  • Extreme events
  • Leptokurtic distributions
  • Multiple imputations
  • Outliers
  • Performance outcomes
  • Risk exposures
  • Turbulence

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