This study provides theory and evidence to demonstrate how relative firm profitability within an industry affects stock …, and that (2) this inverse relation between relative profitability and return sensitivity is more pronounced when there is … the two fundamental factors that contribute to profitability – cost efficiency and market share – each exhibit an effect …

return (ROA) as a measure of economic profitability. We turn this reasoning process on its head by demonstrating that a … suitable (weighted average) aggregation of ROAs better captures what is generally meant by economic profitability than does the … profitability in the sense that it will correspond exactly with what would be obtained from a net present value calculation. We also …

enhanced in a way that not only survives common risk adjustments but also maintains profitability after trading costs. For our …