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Evolution of Profit Persistence in the US: Evidence from four 20-years periods

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Abstract

The present study analyzes and compares profit persistence in four different samples of US companies during the periods 1950-72, 1960-80, 1970-90 and 1980-99. While most of the previous studies perform profit persistence analysis on survivors only, the present setup allows for companies to enter and exit the analyzed sample, thus giving a more comprehensive depiction of the US economy during this half of the century. The results point towards an increase of competition after the opening of the US economy to international competition in the 60-80´s, nevertheless the speed seems to have decreased in the most recent period. Key determinants of profit persistence seem to be firm´s size, industry- and firm growth, and firm growth, and in the most recent period industry concentration, market share, and the company´s merger activity.

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Paper provided by University of Vienna, Department of Economics in its series Vienna Economics Papers with number 0410.

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Date of creation: Sep 2004
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Handle: RePEc:vie:viennp:0410

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  1. Glen, Jack & Lee, Kevin & Singh, Ajit, 2001. "Persistence of profitability and competition in emerging markets," Economics Letters, Elsevier, vol. 72(2), pages 247-253, August.
  2. Goddard, J. A. & Wilson, J. O. S., 1999. "The persistence of profit: a new empirical interpretation," International Journal of Industrial Organization, Elsevier, vol. 17(5), pages 663-687, July.
  3. Klaus Gugler & Dennis C. Mueller & B. Burcin Yurtoglu & Christine Zulehner, 2001. "The Effects of Mergers: An International Comparison," CIG Working Papers FS IV 01-21, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  4. Klaus Gugler & Dennis C. Mueller & B. Burcin Yurtoglu, 2005. "The determinants of merger waves," Working Papers 05-15, Utrecht School of Economics.
  5. Jesus Crespo Cuaresma & Adelina Gschwandtner, 2006. "The competitive environment hypothesis revisited: non-linearity, nonstationarity and profit persistence," Applied Economics, Taylor & Francis Journals, vol. 38(4), pages 465-472.
  6. Gugler, Klaus & Mueller, Dennis C & Yurtoglu, B Burcin, 2004. "Corporate Governance and the Returns on Investment," Journal of Law and Economics, University of Chicago Press, vol. 47(2), pages 589-633, October.
  7. Geroski, Paul A & Jacquemin, Alexis, 1988. "The Persistence of Profits: A European Comparison," Economic Journal, Royal Economic Society, vol. 98(391), pages 375-89, June.
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Cited by:
  1. Jes�S Crespo Cuaresma & Adelina Gschwandtner, 2008. "Tracing The Dynamics Of Competition: Evidence From Company Profits," Economic Inquiry, Western Economic Association International, vol. 46(2), pages 208-213, 04.
  2. Gschwandtner, Adelina & Hirsch, Stefan, 2011. "Profit Persistence in the Food Industry: Evidence from five European Countries," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114534, European Association of Agricultural Economists.
  3. Canarella, Giorgio & Miller, Stephen M. & Nourayi, Mahmoud M., 2013. "Firm profitability: Mean-reverting or random-walk behavior?," Journal of Economics and Business, Elsevier, vol. 66(C), pages 76-97.
  4. Singh, Ajit, 2013. "Competition, Competition Policy, Competitiveness, Globalisation and Development," MPRA Paper 53027, University Library of Munich, Germany, revised 13 Jan 2014.
  5. Adelina Gschwandtner & Michael Hauser, 2013. "Profit Persistence and Stock Returns," Studies in Economics 1320, Department of Economics, University of Kent.
  6. Marco Capasso & Elena Cefis & Koen Frenken, 2009. "Do some Firms Persistently Outperform?," Working Papers 09-28, Utrecht School of Economics.

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