A business journalist recently argued that "well-managed firms aren't necessarily more profitable than those with average management." He examined the rates of return earned by stockholders in a group of 25 firms cited in a particular year as "especially well-managed", and found that the average return on their stocks for the subsequent three years almost exactly matched the return on the New York Stock Exchange Index for the same period. "If well managed firms were really more profitable, stockholders' returns would have been superior," he argued. Do you agree with his conclusion? Explain briefly. (Assume that everyone agreed that these 25 firms had superior management.)

Answer rating: 100% (QA)

The journalists conclusion doesnt necessarily hold up While its true that the ... View the full answer