International Differences in Profitability

Harry Bloch, Yixiao Zhou

    Research output: Contribution to journalArticle

    Abstract

    We examine the global distribution of company profitability over the 30 years from 1989 to 2018 focusing on the international dimension. We find the international component of profitability differences first declines and then rises. Regression analysis of time-series data shows that transitory shocks to international profitability differences mostly dissipate over a few years, although there is evidence of persistent profitability differences for many countries. Dividing the sample to accommodate a structural break, the rate of dissipation declines between 1989–2002 and 2003–2018 subperiods. The extent of persistent differences also declines, suggesting convergence of international differences in profitability may have reached its limit.
    Original languageEnglish
    Pages (from-to)101-116
    JournalEconomic Record
    Volume100
    Issue number328
    DOIs
    Publication statusPublished - 2024

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