The Value of Software

Roberto Gómez-Cram and Alastair Lawrence

American Economic Review, 2025, vol. 115, issue 10, 3514-58

Abstract: Software is one of the most important assets that needs to be priced in the digital economy. It has emerged as a disruptive technology, with companies primarily valued for their software offerings growing from 2 percent to 13 percent of market share between 1996 and 2023. We document persistent anomalies in growth forecasts and stock returns for software companies, indicating significant deviations from rational expectations over multiple decades. Our findings are consistent with Bayesian investors gradually learning about software's growing importance, highlighting how markets can be very slow to discern fundamental shifts from transient shocks in noisy data.

JEL-codes: D22 G12 G32 L14 L86 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.aeaweb.org/doi/10.1257/aer.20230463 (application/pdf)
https://doi.org/10.3886/E226085V1 (text/html)
https://www.aeaweb.org/articles/materials/23967 (application/pdf)
https://www.aeaweb.org/articles/materials/23968 (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aecrev:v:115:y:2025:i:10:p:3514-58

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

DOI: 10.1257/aer.20230463

Access Statistics for this article

American Economic Review is currently edited by Esther Duflo

More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().