Who Are America's Star Firms?

Who Are America's Star Firms?

There is wide spread concern about a growing gap between top-performing publicly listed firms and the rest of the economy and the implications of this for rising inequality in the U.S. Using conventional return calculations, there is indeed a widen...

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Bibliographic Details
Main Authors: Ayyagari, Meghana, Demirguc-Kunt, Asli, Maksimovic, Vojislav
Format: Working Paper
Language:English
Published: Washington, DC: World Bank 2018
Subjects:
INEQUALITY
RATE OF RETURN
RETURN ON CAPITAL
SKILLED LABOR
INTANGIBLE CAPITAL
EARNINGS
MARKET POWER
LISTED FIRMS
Online Access:http://documents.worldbank.org/curated/en/109791531501183455/Who-are-Americas-star-firms
http://hdl.handle.net/10986/30069
id okr-10986-30069
recordtype oai_dc
spelling okr-10986-300692021-11-07T12:13:07Z Who Are America's Star Firms? Ayyagari, Meghana Demirguc-Kunt, Asli Maksimovic, Vojislav INEQUALITY RATE OF RETURN RETURN ON CAPITAL SKILLED LABOR INTANGIBLE CAPITAL EARNINGS MARKET POWER LISTED FIRMS There is wide spread concern about a growing gap between top-performing publicly listed firms and the rest of the economy and the implications of this for rising inequality in the U.S. Using conventional return calculations, there is indeed a widening gap between star firms (defined as those with top 10 percent of return on invested capital in any year) and the rest of the economy over time, especially in industries that rely on a skilled labor force. However, once measurement error in intangible capital is accounted for, this gap shrinks dramatically and has not been widening over time. While pricing power, as measured by markups, predicts star firm status, a large fraction of star firms have low markups and there is no evidence that star firms are cutting output or investment more than other firms for the same markup. The effect of star status is persistent. Five years later, star firms have higher growth, profits, and Tobin's Q. A subset of exceptional firms may pose more pressing policy concerns with much higher returns and the potential to exercise market power in the future. 2018-07-30T20:51:36Z 2018-07-30T20:51:36Z 2018-07 Working Paper http://documents.worldbank.org/curated/en/109791531501183455/Who-are-Americas-star-firms http://hdl.handle.net/10986/30069 English Policy Research Working Paper;No. 8534 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank Washington, DC: World Bank Publications & Research Publications & Research :: Policy Research Working Paper United States
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
topic INEQUALITY
RATE OF RETURN
RETURN ON CAPITAL
SKILLED LABOR
INTANGIBLE CAPITAL
EARNINGS
MARKET POWER
LISTED FIRMS
spellingShingle INEQUALITY
RATE OF RETURN
RETURN ON CAPITAL
SKILLED LABOR
INTANGIBLE CAPITAL
EARNINGS
MARKET POWER
LISTED FIRMS
Ayyagari, Meghana
Demirguc-Kunt, Asli
Maksimovic, Vojislav
Who Are America's Star Firms?
geographic_facet United States
relation Policy Research Working Paper;No. 8534
description There is wide spread concern about a growing gap between top-performing publicly listed firms and the rest of the economy and the implications of this for rising inequality in the U.S. Using conventional return calculations, there is indeed a widening gap between star firms (defined as those with top 10 percent of return on invested capital in any year) and the rest of the economy over time, especially in industries that rely on a skilled labor force. However, once measurement error in intangible capital is accounted for, this gap shrinks dramatically and has not been widening over time. While pricing power, as measured by markups, predicts star firm status, a large fraction of star firms have low markups and there is no evidence that star firms are cutting output or investment more than other firms for the same markup. The effect of star status is persistent. Five years later, star firms have higher growth, profits, and Tobin's Q. A subset of exceptional firms may pose more pressing policy concerns with much higher returns and the potential to exercise market power in the future.
format Working Paper
author Ayyagari, Meghana
Demirguc-Kunt, Asli
Maksimovic, Vojislav
author_facet Ayyagari, Meghana
Demirguc-Kunt, Asli
Maksimovic, Vojislav
author_sort Ayyagari, Meghana
title Who Are America's Star Firms?
title_short Who Are America's Star Firms?
title_full Who Are America's Star Firms?
title_fullStr Who Are America's Star Firms?
title_full_unstemmed Who Are America's Star Firms?
title_sort who are america's star firms?
publisher Washington, DC: World Bank
publishDate 2018
url http://documents.worldbank.org/curated/en/109791531501183455/Who-are-Americas-star-firms
http://hdl.handle.net/10986/30069
_version_ 1764471128003182592

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