Firm performance revisited: Idiosyncratic macroeconomic exposure and firm size. Evidence from the United States

A systematic approach is adopted to incorporate exogenous macroeconomic information into firm-level performance assessment based on firm fundamentals. A large sample of US-based firms over the 2009-2017 time period is used, with both domestic and foreign sales subject to regional-specific macroeconomic conditions, measured via real GDP growth rates. The construction of a new macroeconomic exposure measure improves firm performance analysis. The results show that the effect of idiosyncratic macroeconomic exposure in conjunction with firm size is more prevalent for small-sized firms to determine performance. Secondly, performance of domestic firms is negatively affected by macroeconomic exposure in contrast to exporting firms. Therefore, this study contributes to the theoretical and empirical literature on firm performance by analyzing the sensitivity of firms, contingent on size, to macroeconomic exposure changes.