How is high ROE associated with low persistent factor?
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Extreme accounting rates of return (ROE) may be consisting of extreme level of accounting accruals. Thereby, such a high level of ROE may not be sustainable and may mean revert. Thereby, low persistent factor.
However, this question generalizes that high ROE = Low persistent factor. In reality, it depends on company to company, wrt the components of ROE, the company’s competitive position, their ability to sustain market leadership.
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