TY - JOUR
T1 - Investment differences between public and private firms
T2 - Evidence from U.S. tax returns
AU - Feldman, Naomi
AU - Kawano, Laura
AU - Patel, Elena
AU - Rao, Nirupama
AU - Stevens, Michael
AU - Edgerton, Jesse
N1 - Publisher Copyright:
© 2021 Elsevier B.V.
PY - 2021/4/1
Y1 - 2021/4/1
N2 - Using tax data, we compare the investment behavior of public and private firms for a representative sample of all U.S. corporations. We find that while both types of firms invest similarly in physical capital, public firms out-invest private firms in R&D. Compared to observationally-similar private firms, public firms invest roughly 50% more in R&D relative to their asset bases. Further, public firms dedicate 7.4 percentage points more of their investments to R&D than private firms. This stronger public firm R&D investment is muted when shareholder earnings pressures are heightened, but not so much as to overcome the baseline investment advantage.
AB - Using tax data, we compare the investment behavior of public and private firms for a representative sample of all U.S. corporations. We find that while both types of firms invest similarly in physical capital, public firms out-invest private firms in R&D. Compared to observationally-similar private firms, public firms invest roughly 50% more in R&D relative to their asset bases. Further, public firms dedicate 7.4 percentage points more of their investments to R&D than private firms. This stronger public firm R&D investment is muted when shareholder earnings pressures are heightened, but not so much as to overcome the baseline investment advantage.
KW - Corporate governance
KW - Investment
KW - Public firms
UR - http://www.scopus.com/inward/record.url?scp=85102335575&partnerID=8YFLogxK
U2 - 10.1016/j.jpubeco.2021.104370
DO - 10.1016/j.jpubeco.2021.104370
M3 - Article
AN - SCOPUS:85102335575
SN - 0047-2727
VL - 196
JO - Journal of Public Economics
JF - Journal of Public Economics
M1 - 104370
ER -