Asymmetric Investment Rates

Integrating national accounting with financial accounting, we provide firm-specific estimates of current-cost capital stocks for the entire Compustat universe, as well as an array of estimates of investment flows, economic depreciation rates, and capital and investment price deflators. The firm-level current-cost investment rate distribution is heavily right-skewed, with a small fraction of negative investment rates, 5.51%, but a huge fraction of positive investment rates, 91.64%. Despite a tiny fraction of inactive investment rates, 2.85%, firm-level investment also seems lumpy, featuring a fraction of 32.66% for positive spikes (investment rates higher than 20%). For a typical firm, 39% of total investment is completed within 20% of the sample years.

Keywords: Asymmetry, lumpy investment, national accounting, financial accounting, economic depreciation, current-cost capital, the investment rate

JEL Classification: D22, D25, E22, E44, G12, G31

Suggested Citation: Suggested Citation

Bai, Hang and Li, Erica X. N. and Xue, Chen and Zhang, Lu, Asymmetric Investment Rates (April 12, 2022). Fisher College of Business Working Paper No. 2022-03-003, Charles A. Dice Working Paper No. 2022-03, Available at SSRN: https://ssrn.com/abstract=4082361 or http://dx.doi.org/10.2139/ssrn.4082361