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The persistence of accounting versus economic profit


  • Matthew J. Holian

    () (San Jose State University)

  • Ali M. Reza

    () (San Jose State University & Rouen Business School)


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.

Suggested Citation

  • Matthew J. Holian & Ali M. Reza, 2010. "The persistence of accounting versus economic profit," Economics Bulletin, AccessEcon, vol. 30(3), pages 2189-2196.
  • Handle: RePEc:ebl:ecbull:eb-10-00118

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    References listed on IDEAS

    1. 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.
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    More about this item


    dynamic competition efficiency persistence;

    JEL classification:

    • L0 - Industrial Organization - - General
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics


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