The persistence of accounting versus economic profit

Matthew Holian and Ali Reza (reza_a@cob.sjsu.edu)
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Ali Reza: San Jose State University & Rouen Business School

Economics Bulletin, 2010, vol. 30, issue 3, 2189-2196

Abstract: Drawing on Schumpeterian theory, this article presents estimates of a first-order autoregressive model of profit persistence for large US firms, using Economic Value Added (EVA), the popular measure of profits produced by Stern Stewart and Company, and simple (unadjusted) accounting measures from the Compustat database. We hypothesize about the differences we should expect to find between these two sets of estimates, and also provide a fresh normative assessment of the dynamic competitiveness of the US economy.

Keywords: dynamic; competition; efficiency; persistence (search for similar items in EconPapers)
JEL-codes: L0 M2 (search for similar items in EconPapers)
Date: 2010-08-21
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