Discussion paper

DP1431 Corporate Growth and Profitability

This paper argues that current-period corporate growth rates reflect changes in current expectations about the long-run profitability of a firm. Using data on a balanced panel of 271 large, quoted UK firms over the period 1976?82, we report the existence of a positive, statistically significant and robust correlation between current-period growth rates and a natural measure of changes in current expectations about long-run profitability, namely changes in the stock market valuation of the firm.


Geroski, P, S Machin and H Samiei (1996), ‘DP1431 Corporate Growth and Profitability‘, CEPR Discussion Paper No. 1431. CEPR Press, Paris & London. https://cepr.org/publications/dp1431