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Full-Text Articles in Business
Firm And Industry Effects In Accounting Versus Economic Profit Data, Matthew J. Holian, Ali M. Reza
Firm And Industry Effects In Accounting Versus Economic Profit Data, Matthew J. Holian, Ali M. Reza
Faculty Publications
This article presents estimates of firm and industry fixed-effects on profit rates for large US corporations, using both Economic Value Added (EVA), the popular measure of profits produced by Stern Stewart and Company, as well as simple (unadjusted) accounting measures as the dependent variable. We find that the improvement in explanatory power of the fixed-effect model is substantially greater when using EVA than has been documented with alternative measures.
The Persistence Of Accounting Versus Economic Profit, Matthew J. Holian, Ali M. Reza
The Persistence Of Accounting Versus Economic Profit, Matthew J. Holian, Ali M. Reza
Faculty Publications
Drawing on Schumpeterian theory, this article presents estimates of a first-order autoregressive model of profit persistence for large US firms, using Economic Value Added (EVA), the popular measure of profits produced by Stern Stewart and Company, and simple (unadjusted) accounting measures from the Compustat database. We hypothesize about the differences we should expect to find between these two sets of estimates, and also provide a fresh normative assessment of the dynamic competitiveness of the US economy.