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The Financial Structure of Firms and the Problems of Risk

In: Economic Papers 1941–88

Author

Listed:
  • Josef Steindl

Abstract

The most comprehensive statistical material available with regard to the question of profitability and size has been published by W.L. Crum on the basis of the American Statistics of Income for corporations.1 These data show that the rate of profit (profit exclusive of interest paid, in proportion to common and preference share capital plus reserves) increases with the size of the corporation (size being measured by value of total assets). The increase is steep in the lowest size classes and flattens out in the high size classes. In Table 5.1 (column A) the profit rates are shown for all corporations and broad groups and as an average of 1931–6. The significant result of Mr Crum’s investigation is, however, that the same relation obtains in all groups and subgroups of corporations, and in all the years for which data are available (that is, 1931–6); the only qualification is that in some years, and in some industries, there is a decline in the profit rate in the highest size classes.

Suggested Citation

  • Josef Steindl, 1990. "The Financial Structure of Firms and the Problems of Risk," Palgrave Macmillan Books, in: Economic Papers 1941–88, chapter 5, pages 65-73, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-349-20821-0_5
    DOI: 10.1007/978-1-349-20821-0_5
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