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NIPA Corporate Profits and Reported Earnings: A Comparison and Measurement Issues


  • Charles Ian Mead
  • Brent R. Moulton
  • Kenneth Petrick

    (Bureau of Economic Analysis)


The users of the national income and product accounts (NIPAs) often compare the growth rates of NIPA profit measures with those of other publicly available measures of reported earnings, such as Standard & Poor's 500 earnings. Differences between the NIPA profit measures and the other reported earnings measures reflect differences in purpose, definitions, and methodologies. Reported earnings are used by the Bureau of Economic Analysis, however, in preparing the quarterly estimates of profits, based on the extrapolation of the tax-accounting measures published by the Internal Revenue Service. In recent years there have been large revisions to NIPA corporate profits when tax-return-based measures have become available. Differences between financial accounting and tax accounting in the treatment of employee stock options have contributed to the revisions. This paper explores these differences and examines possible improvements to the methods used for extrapolating NIPA corporate profits estimates that would incorporate more current information on employee stock options.

Suggested Citation

  • Charles Ian Mead & Brent R. Moulton & Kenneth Petrick, 2004. "NIPA Corporate Profits and Reported Earnings: A Comparison and Measurement Issues," BEA Papers 0036, Bureau of Economic Analysis.
  • Handle: RePEc:bea:papers:0036

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    References listed on IDEAS

    1. Robert C. Feenstra & Gordon H. Hanson, 1999. "The Impact of Outsourcing and High-Technology Capital on Wages: Estimates For the United States, 1979–1990," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 907-940.
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    3. Salvatore Baldone & Fabio Sdogati & Lucia Tajoli, 2001. "Patterns and determinants of international fragmentation of production: Evidence from outward processing trade between the EU and Central Eastern European countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 137(1), pages 80-104, March.
    4. Zhang, Kevin Honglin & Markusen, James R., 1999. "Vertical multinationals and host-country characteristics," Journal of Development Economics, Elsevier, vol. 59(2), pages 233-252, August.
    5. Peter J Buckley & R D Pearce, 1979. "Overseas Production and Exporting by the World's Largest Enterprises: A Study in Sourcing Policy," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 10(1), pages 9-20, March.
    6. Andersson, Thomas & Fredriksson, Torbjorn, 2000. "Distinction between intermediate and finished products in intra-firm trade," International Journal of Industrial Organization, Elsevier, vol. 18(5), pages 773-792, July.
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    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General


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