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Corporate Growth and Profitability

Author

Listed:
  • Geroski, Paul A
  • Machin, Stephen
  • Samiei, Hossein

Abstract

This paper argues that current-period corporate growth rates reflect changes in current expectations about the long-run profitability of a firm. Using data on a balanced panel of 271 large, quoted UK firms over the period 1976?82, we report the existence of a positive, statistically significant and robust correlation between current-period growth rates and a natural measure of changes in current expectations about long-run profitability, namely changes in the stock market valuation of the firm.

Suggested Citation

  • Geroski, Paul A & Machin, Stephen & Samiei, Hossein, 1996. "Corporate Growth and Profitability," CEPR Discussion Papers 1431, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:1431
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    File URL: https://cepr.org/publications/DP1431
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    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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