Globalization and Profitability of US Firms: The Role of Intangibles / Bullipe R. Chintha, Ravi Jagannathan, Sri S. Sridhar.

Format:

Book

Author/Creator:

Chintha, Bullipe R.

Contributor:

National Bureau of Economic Research.

Jagannathan, Ravi.

Sridhar, Sri S.

Series:

Working Paper Series (National Bureau of Economic Research) no. w32202.

NBER working paper series no. w32202

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2024.

Summary:

China's admission into the WTO in 2001 heralded a new era of globalization, increasing both import competition in domestic markets and foreign opportunities for US firms. In the aggregate, the average annual profitability of US public firms during the post globalization period (2003-2019) increased by 11.5% of the corresponding pre-globalization period (1984-2002) profitability. This increase in overall aggregate profitability was primarily driven by foreign profitability increasing by 47.4% for firms in the S&P 500 index, which are larger and have more intangible assets created by R&D and SG&A expenditures. In contrast, following globalization, the average aggregate domestic profitability of US firms remained flat, and firms employed more capital to generate sales. Firms with higher intangible assets benefited more from globalization.

Notes:

Print version record

March 2024.