Firms have very different inventory levels. How much of this heterogeneity is due to differences among firms, versus among industries? Using all observations in COMPUSTAT for 1950 through 2004, we find that both industry and firm effects are significant. Further, firm effects are as strong as,...

How does operational competence translate into market value, when firms cannot credibly communicate their competence to the market? I consider the example of inventory and fill rates. When the market sees a high-inventory firm, it cannot tell whether the inventory is due to incompetence or a...