Investment differences between public and private firms: Evidence from U.S. tax returns

Naomi Feldman, Laura Kawano, Elena Patel, Nirupama Rao, Michael Stevens and Jesse Edgerton

Journal of Public Economics, 2021, vol. 196, issue C

Abstract: Using tax data, we compare the investment behavior of public and private firms for a representative sample of all U.S. corporations. We find that while both types of firms invest similarly in physical capital, public firms out-invest private firms in R&D. Compared to observationally-similar private firms, public firms invest roughly 50% more in R&D relative to their asset bases. Further, public firms dedicate 7.4 percentage points more of their investments to R&D than private firms. This stronger public firm R&D investment is muted when shareholder earnings pressures are heightened, but not so much as to overcome the baseline investment advantage.

Keywords: Investment; Public firms; Corporate governance (search for similar items in EconPapers)
JEL-codes: G31 G34 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:196:y:2021:i:c:s0047272721000062

DOI: 10.1016/j.jpubeco.2021.104370

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