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The outperformance of higher-quality small caps relative to lower-quality companies has been well documented, notably in AQR's 2015 paper, "Size Matters, If You Control Your Junk."
The intuition behind this anomaly is straightforward: Lower-quality small caps have less capacity to distribute earnings to shareholders or invest for growth, are more likely to issue shares and, in a worst-case scenario, are more likely to go bankrupt.
The table below shows the performance of 25 portfolios ranked by size and operating profitability (i.e., quality) from the Fama-French Data Library back