IDEAS home Printed from https://ideas.repec.org/a/taf/apeclt/v18y2011i16p1571-1576.html
   My bibliography  Save this article

Capital allocation, stock return volatility and productivity growth in US industries

Author

Listed:
  • Hyunbae Chun
  • Jung-Wook Kim

Abstract

Using firm-level Compustat data from 1971 to 2000, we report a substantial cross-industry variation of allocative efficiency in capital expenditure in the US economy. Industries with higher allocative efficiency are the ones with higher firm-level value-added growth heterogeneity, higher information transparency captured by firm-specific stock return volatility and faster long-run productivity growth. This finding is consistent with the idea of creative destruction, where a well-functioning market mechanism sharply distinguishes winners from losers and thus enhances economic growth in the long run. Allocative efficiency has a substantial economic significance and explains as much as 24.5% of the difference in long-run industry productivity growth.

Suggested Citation

  • Hyunbae Chun & Jung-Wook Kim, 2011. "Capital allocation, stock return volatility and productivity growth in US industries," Applied Economics Letters, Taylor & Francis Journals, vol. 18(16), pages 1571-1576.
    • Handle: RePEc:taf:apeclt:v:18:y:2011:i:16:p:1571-1576
    DOI: 10.1080/13504851.2010.548781
    as

    Download full text from publisher

    File URL: http://www.informaworld.com/openurl?genre=article&doi=10.1080/13504851.2010.548781&magic=repec&7C&7C8674ECAB8BB840C6AD35DC6213A474B5
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/13504851.2010.548781?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:apeclt:v:18:y:2011:i:16:p:1571-1576. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEL20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.