Bridge over ocean
1 November 1994 Financial Analysts Journal Volume 50, Issue 6

Growth, Value, Good, and Bad

  1. Roger G. Clarke
  2. Meir Statman, PhD
The growth-value and small-large scales are popular, but they suffer from two deficiencies: They are not grounded in theory, and they lack clear definition. Shefrin and Statman offered a remedy in a theory in which the quality scale--the scale that separates good companies from bad--plays a central role. Here, the ratings in the Fortune survey of company quality are used as direct measures of perceptions of company quality and a proxy for the Fortune quality ratings is constructed from the BARRA, Inc., list of company characteristics. This quality scale has applications in style selection and style rotation.
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