Journal of Financial and Quantitative Analysis 2026
Star Firms, Information Spillovers, and Predictable Industry-Level Outcomes
Abstract
We study the aggregate impact of information spillovers emerging from industry star firms. Changes in stars’ relative earnings growth predict future earnings growth, consensus earnings surprises, and job postings of same-industry nonstar firms. Star-firm performance also predicts industry-level GDP and employment growth. Price markup and innovation spillovers are potential channels underlying these patterns. Our results further show that this performance predictability is not fully incorporated into nonstars’ stock prices. A long–short portfolio based on star firms’ earnings growth earns an annualized 6-factor alpha of 8.7%. Together, our findings provide consistent evidence of the economic importance of star firms.
- DOI
- 10.1017/s0022109026102610
- Pages
- 1-33
- Language
- en
- Sources
- openalex crossref