Disaggregated Investment and Corporate Performance: Evidence from a Panel of UK Firms
AbstractIn recent work, De Long and Summers find a dominant role for investment in equipment to explain growth-differences across countries, and reject the standard Solow growth model. However, Auerbach et al reject these results in the OECD subsample of advanced industrial countries. In a different approach, Oulton and O'Mahony also find little support for the special importance of equipment using UK industry data. With a panel of large UK firms, we find equipment investment plays a major role in sales and profit growth, while other investment has weak and only partially significant effects. These surprising results suggest a misallocation of investment and some tentative policy conclusions.
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Bibliographic InfoPaper provided by Centre for Research into Industry, Enterprise, Finance and the Firm in its series CRIEFF Discussion Papers with number 9420.
Date of creation: Oct 1994
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investment; growth; corporate performance; panel data;
Find related papers by JEL classification:
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
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