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When looking up the aforementioned paper in the Journal of Financial Research by Darrat et al I also found this one


W. Scott Bauman
Northern Illinois University

C. Mitchell Conover
University of Richmond

Don R. Cox
Appalachian State University


Previous research finds that large companies
previously judged to be excellent growth companies
have subsequently been poor investments. Our study
examines 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.

i found this remark particularly telling

"We find positive excess returns in the pre-publication period,"

(hence that is why they are chosen by the publishers, see the mea culpa written by the TSCM writer that i mentioned earlier)

"but negative excess returns in the post-publication period."

they explain this effect as reversion to the mean in terms of operating performance, but i suspect that there is also a mean reversion with respect to valuation going on as well.


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