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For example, consider the highlighted sentence: "A greater proportion of American companies are older, larger, and more profitable than in the late 20th century, which explains much of the increase in corporate payouts."
Except that this isn't a report on American companies, but rather "nonfinancial firms listed on US exchanges that the researchers studied."
As is well known, the number of listed companies has declined by half since the 20th century. Naturally those remaining would tend to be the older, larger ones. Younger, smaller ones would be the ones choosing to stay private.
The paragraph you reference doesn't hang together for me:
The researchers did not find any evidence that higher payouts had reduced corporate capital expenditures or corporate performance; and
While ... capital expenditures [of firms with high payouts] fell after 2000, the same was true for firms with lower payouts.
The second sentence says that the relative level of payouts across companies does not correlate with companies' capital expenditures. That's not the same as failing to find any relationship between higher payouts and lower capital expenditures.
The paper makes clear that since 2000 payouts have been increasing (that's the whole subject of the piece), and the second sentence says that all firms (on average) whether they're relatively high payers or not are reducing capital expenditures.
I take that as little more than the cost of capital declines as the US evolves toward an information based economy with cheap computers, storage, and networks.
Comments
For example, consider the highlighted sentence: "A greater proportion of American companies are older, larger, and more profitable than in the late 20th century, which explains much of the increase in corporate payouts."
Except that this isn't a report on American companies, but rather "nonfinancial firms listed on US exchanges that the researchers studied."
As is well known, the number of listed companies has declined by half since the 20th century. Naturally those remaining would tend to be the older, larger ones. Younger, smaller ones would be the ones choosing to stay private.
Vanguard has a nice paper discussing this in more depth:
What's behind the falling number of public companies? https://personal.vanguard.com/pdf/ISGPCA.pdf
The paragraph you reference doesn't hang together for me:
- The researchers did not find any evidence that higher payouts had reduced corporate capital expenditures or corporate performance; and
- While ... capital expenditures [of firms with high payouts] fell after 2000, the same was true for firms with lower payouts.
The second sentence says that the relative level of payouts across companies does not correlate with companies' capital expenditures. That's not the same as failing to find any relationship between higher payouts and lower capital expenditures.The paper makes clear that since 2000 payouts have been increasing (that's the whole subject of the piece), and the second sentence says that all firms (on average) whether they're relatively high payers or not are reducing capital expenditures.
I take that as little more than the cost of capital declines as the US evolves toward an information based economy with cheap computers, storage, and networks.
https://www.washingtonpost.com/opinions/stock-buybacks-and-a-shaky-economy/2020/07/19/5d31791a-c84c-11ea-8ffe-372be8d82298_story.html
https://www.nber.org/papers/w26958