Risk and Corporate Rates of Return: Reply

Fisher, Irving; Hall, George R.

doi:10.2307/1885938

Cited by 8 publications

(5 citation statements)

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“…7 The POP series is based around a 5-year payoff period because this payoff period is commonly used in practice by many businesses, especially SMEs. 8 See also Keynes (1936) on links between depreciation and user cost and Fisher and McGowan (1983); Fisher (1984) extending Harcourt's insights into an analysis of depreciation rate anomalies, in which there are no simple rules of thumb to enable adjustment.…”

Section: Notesmentioning

confidence: 99%

Capital investment, business behaviour, and the macroeconomy

Baddeley

2023

Econ. labour relat. rev.

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GC Harcourt made many fundamental and essential contributions to the development of capital investment theory – most famously via his development of the Cambridge Capital Controversies, exposing conceptual and analytical flaws and contradictions in neoclassical approaches to defining and measuring capital. Relatedly, Harcourt also made essential contributions to our understanding of how accounting rules, used by real-world businesses to guide their investment decision-making, create anomalies and deficiencies in the accumulation of capital at a microeconomic level – with significant, deleterious consequences for the accumulation of capital at a macroeconomic level. In developing Harcourt’s contributions, this paper links Harcourt’s early insights about accounting rules with subsequent developments in behavioural economic models of business decision-making, thus aligning Harcourt’s contributions with insights from behavioural models of investment decision-making. These insights are then combined in showing how the misapplication of investment appraisal criteria at a microeconomic level contributes to under-investment and investment volatility in the macroeconomy, with negative implications for output, employment, labour productivity, wages and cyclical volatility.

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Section: Notesmentioning

confidence: 99%

Capital investment, business behaviour, and the macroeconomy

Baddeley

2023

Econ. labour relat. rev.

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“…Seller concentration usually characterizes the structure of the market in which the firm operates and single-equation models are employed in the estimation procedures (Samuels and Smyth, 1968;Fisher andHall, 1969 andWinn, 1975 and1977). Hurdle (1974) Bothwell, Cooley and Hall (1984).…”

Section: Part IVmentioning

confidence: 99%

“…Accordingly, true profits and advertising may be over-or under-estimated. Third, the cost-fixity measure ignores the fact that income elasticities vary and that profit variance can be linked to demand variance as well as to the ratio of fixed to total costs (Comanor and Wilson, 1971 Caves and Yamey (1971), Fisher and Hall (1971) and Winn (1977). (4 The data sources and construction of the variables are described in the Appendix.…”

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confidence: 99%

Industry risk and market structure

Esposito

1985

Rev Ind Organ

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“…This is largely explained by a larger share of corporate profits in national income now than in the 1980s. Dating back to at least Caves and Yamey (1971) and Fisher and Hall (1971), there has been debate about what corporate profits represent. Profits can include a combination of the normal rate of return, a risk premium, economic rents and the return to managerial or entrepreneurial inputs.…”

Section: Introductionmentioning

confidence: 99%

Taxable Corporate Profits

Griffith

Miller

2014

Fiscal Studies

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Revenues from corporate income taxes have remained relatively stable as a share of national income over the last three decades despite reductions in corporate tax rates and increased opportunities for multinational tax avoidance. This is largely explained by an increase in the share of corporate profits in national income. In this paper, we discuss the sources of corporate profits, and specifically corporate taxable profits; these include a normal return to capital investment, returns to labour or entrepreneurial effort that are realised as dividends or capital gains, and returns to market power. We relate these components of profits to the ways that corporate taxes can change incentives to invest or exert effort, and we discuss some implications for policy. Policy points• It has long been known that a tax on the normal return to capital distorts investment decisions. • The tax treatment of the return to the effort of capital owners depends on the interaction between corporate and personal taxes. In some cases, 536Fiscal Studies equity-based remuneration is taxed more favourably than salary income. There is not a clear justification for this. • A tax on economic rents can distort decisions about the location of investments and the incentives over where to earn taxable income. • Reforms to corporate taxes over recent years have focused on reducing taxes on highly profitable and mobile firms. Little attention has been paid to reducing taxes on the normal return to capital or to how corporate taxes affect incentives when labour is remunerated through share schemes.

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Risk and Corporate Rates of Return: Reply

Cited by 8 publications

References 0 publications

Capital investment, business behaviour, and the macroeconomy

Capital investment, business behaviour, and the macroeconomy

Industry risk and market structure

Taxable Corporate Profits

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