The link between product market competition and firm performance has been a major theme in industrial organization research. Starting with the seminal paper by Bain (1951) and subsequent supporting studies by Collins and Preston (1969), Demsetz (1973) and Mann (1966) this strand of literature establishes convincing evidence of higher profitability among firms in highly concentrated industries. Collins and Preston (1969), specifically, look into the concentration levels of 417 four-digit SIC industries over the period 1958–۱۹۶۳, and they show that firms in highly concentrated industries and the largest firms in these industries enjoy higher price-cost margins than all other firms. Extending the literature on market structure and firm profitability, Melicher, Rush, and Winn (1976) examine a sample of 500 manufacturing firms over the 1967–۱۹۷۵ period and show that portfolios of firms in highly concentrated industries do not generate superior or excess returns after adjusting for firm risk. Sullivan (1978) examines a sample of 1409 firms in 1972 and documents that a powerful firm (based upon its share of the sales in 4-digit SIC codes in 1972) and/or a firm in a concentrated industry incurs lower cost of capital than a non-powerful firm and/or a firm in a competitive industry. In addition, since these powerful firms experience lower systematic risk (estimated using data ∗ Corresponding author. E-mail addresses: S.R.Jory@soton.ac.uk (S. Jory), ngot@ecu.edu (T. Ngo). from 1963–۱۹۷۲), the expected returns on these powerful firms are lower than non-powerful firms.