Working Paper: NBER ID: w29957
Authors: Hang Bai; Erica X. N. Li; Chen Xue; Lu Zhang
Abstract: Integrating national accounting with financial accounting, we provide firm-specific estimates of current-cost capital stocks for the entire Compustat universe, as well as an array of estimates of investment flows, economic depreciation rates, and capital and investment price deflators. The firm-level current-cost investment rate distribution is heavily right-skewed, with a small fraction of negative investment rates, 5.51%, but a huge fraction of positive investment rates, 91.64%. Despite a tiny fraction of inactive investment rates, 2.85%, firm-level investment also seems lumpy, featuring a fraction of 32.66% for positive spikes (investment rates higher than 20%). For a typical firm, 39% of total investment is completed within 20% of the sample years.
Keywords: Investment Rates; Current-Cost Capital Stocks; Firm-Level Measurement
JEL Codes: E44; G12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Integrating national accounting with financial accounting (E01) | More accurate measurement of firm-level investment rates (G31) |
| Constructed current-cost capital stocks (E22) | More reliable basis for calculating investment flows (F21) |
| Current-cost capital stocks (G31) | Investment flows (F21) |
| Economic depreciation rates (E43) | Investment flows (F21) |
| Firm-level current-cost investment rate distribution is heavily right-skewed (G31) | Costly reversibility in investment decisions (G31) |
| Firm-level investment appears lumpy (D25) | Consistent pattern of investment behavior (G11) |