The Operating Performance of High Performance Companies during a Period of Financial Crisis: Risks and Opportunities

Abstract

The global financial crisis of 2007-2009 presented a challenge to all companies around the globe. This study investigates whether companies that exhibit high performance characteristics in the pre-financial crisis period can maintain their high performance in the post-financial crisis period and, if so, what operating characteristics are most important in managing a company through such a period. This study empirically investigates 1,480 companies in the United States and twenty-two other countries (MSCI index) over the periods 1998-2007 (benchmark) and 2008-2009 to identify HPC from the former period that exited, sustained, exited, or entered HPC status in the latter period, (1) to identify the operating characteristics of companies that were able to sustain high performance from 1998-2007 into 2008-2009. (2) to identify the operating characteristics (performance drivers and performance measures) and associated risk factors which were most critical for companies that exited HPC status in the 2008-2009 period, and (3) to identify the operating characteristics which provided opportunities for companies that emerged to HPC status in the post-financial crisis period. The results provide direction for management of companies that aspire to HPC status and to maintain HPC status particularly in times of global financial stress.