The Value Gap: Europe Cannot Scale / Bo Becker, Efraim Benmelech, Joao Monteiro.

Format:

Book

Author/Creator:

Becker, Bo.

Contributor:

Benmelech, Efraim.

Monteiro, Joao.

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w35577.

NBER working paper series no. w35577

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2026.

Summary:

In 2008, the aggregate market value of U.S.-listed firms was roughly one-third higher than that of European-listed firms. By 2023, it was more than 300% higher, a difference of $34 trillion. The valuation gap is broad-based, rather than concentrated among a few superstar firms, and is driven by differences in firm values, not in the number of listed firms. Across sectors, the gap is larger in R&D-intensive industries and in industries with high returns to scale. European firms' size is strongly correlated with home-country GDP, whereas U.S. firms' size is unrelated to home-state GDP. Smaller European firms also face a particularly large cost-of-capital gap and do not appear able to substitute debt for limited access to equity financing, including venture capital. Taken together, these facts suggest that financial and product-market frictions constrain European firms' ability to scale.

Notes:

August 2026.

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