Transformation in Production Technology and the Dynamics of Corporate Investment

66 Pages Posted: 14 Feb 2015 Last revised: 28 Dec 2020

See all articles by Fangjian Fu

Fangjian Fu

Singapore Management University - Lee Kong Chian School of Business

Sheng Huang

China Europe International Business School (CEIBS)

Rong Wang

Singapore Management University; Singapore Management University - Lee Kong Chian School of Business

Date Written: December 18, 2019

Abstract

Capital expenditures of U.S. public firms, relative to total assets, decrease by more than half from 1980 to 2016. The decline is pervasive across industries and firms of different characteristics, and cannot be explained by the usual determinants of investment and many other seemingly plausible reasons. The decline is consistent with the transformation in production technology – firms rely more on intangible capital and less on fixed assets in production. Industry-level analyses yield supporting evidence. We observe similar declining trend in capital expenditure in other developed countries but not in emerging markets.

Keywords: Corporate investment, capital expenditure, intangible capital, firm production, economic globalization

JEL Classification: D22, G30, G31

Suggested Citation

Fu, Fangjian and Huang, Sheng and Wang, Rong, Transformation in Production Technology and the Dynamics of Corporate Investment (December 18, 2019). Available at SSRN: https://ssrn.com/abstract=2564451 or http://dx.doi.org/10.2139/ssrn.2564451

Fangjian Fu (Contact Author)

Singapore Management University - Lee Kong Chian School of Business ( email )

50 Stamford Road
Singapore, 178899
Singapore

Sheng Huang

China Europe International Business School (CEIBS) ( email )

Shanghai-Hongfeng Road
Shanghai 201206
Shanghai 201206
China

Rong Wang

Singapore Management University ( email )

Li Ka Shing Library
70 Stamford Road
Singapore 178901, 178899
Singapore

Singapore Management University - Lee Kong Chian School of Business ( email )

469 Bukit Timah Road
Singapore 912409
Singapore

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