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Author: | Geroski, P. Machin, S. Walters, C. |
Title: | Corporate growth and profitability |
Journal: | Journal of Industrial Economics
1997 : JUN, VOL. 45:2, p. 171-189 |
Index terms: | INDUSTRIAL ECONOMICS COMPANY GROWTH PROFITABILITY |
Language: | eng |
Abstract: | This paper argues that current period corporate growth rates reflect changes in current expectations about the long run profitability of a firm. This means that growth rates are likely to vary randomly over time. Using data from 271 large, quoted UK firms over the period 1976-1982, the authors 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. |
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