Profit Puzzles or: Public Firm Profits Have Fallen
General Economics
2022-01-25 v1 Economics
Abstract
We show that public firm profit rates fell by half since 1980. Inferred as the residual from the rise of US corporate profit rates in aggregate data, private firm profit rates doubled since 1980. Public firm financial returns matched their fall in profit rates, while public firm representativeness increased from 30% to 60% of the US capital stock. These results imply that time-varying selection biases in extrapolating public firms to the aggregate economy can be severe.
Keywords
Cite
@article{arxiv.2201.09160,
title = {Profit Puzzles or: Public Firm Profits Have Fallen},
author = {Carter Davis and Alexandre Sollaci and James Traina},
journal= {arXiv preprint arXiv:2201.09160},
year = {2022}
}