The performance of dominant companies : portfolio performance evaluation

• Autor(a) principal: Gandra, Ana Filipa Neto
• Data de Publicação: 2020
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10400.14/31878
• topic: Portfolio evaluation; Dominant companies; Market share; United Kingdom; Avaliação de portfolios; Empresas dominantes; Quota de mercado; Reino Unido; Domínio/Área Científica::Ciências Sociais::Economia e Gestão

Several studies look at the relationship between market share and rate of return, but there isn’t a consensus about the topic. I studied the particular case of companies that dominate their sector, with the goal of discovering if they outperformed the market. If these companies actually performed better than the market, I would have discovered a good investment strategy. I used OLS regression and Newey-West standard errors to find out the abnormal returns of the portfolios of dominant companies I constructed. The results using OLS regression were, in general, statistically non-significant, which indicated that investing in dominant companies doesn’t seem to be a good investment strategy, as it doesn’t have any advantage when compared to investing in the market. However, I obtained significant results by using Newey-West standard errors. The alphas’ estimations were positive, but very low, indicating that investing in dominant companies is only slightly better than investing in the market portfolio. Nevertheless, I think it is important to conduct more studies about this matter, as it is possible to obtain a better sample and look at the problem from various angles.