Measuring Long Term Superior Performance: The UK's Long-Term Superior Performers 1984-2003

Abstract

This article examines the issue of determining long-term sustained superior financial performance. We demonstrate that the technique of frontier analysis is a robust and theoretically consistent way to identify relative performance. We show how our approach, addresses the three critical issues in the measurement of performance: balancing short-term and long-term performance, capturing the multidimensional nature of performance, and finding the right peer comparators. We apply the technique to two common types of performance rankings: single year performance within an industry (oil) and multi-year performance across industries and years (215 publicly-listed UK companies, in 38 industries over 20 years).

Keywords: Superior Performance, Frontier Analysis

JEL Classification: C4, D4, L1, M1