EVOLUTION OF PROFIT PERSISTENCE IN THE USA: EVIDENCE FROM THREE PERIODS*

Abstract

In the present study we analyze and compare profit persistence during the periods 1950–66, 1967–83 and 1984–99 in the USA. While most of the previous studies performed persistence analysis on survivors only, the present set‐up allows for companies to enter and exit the analyzed sample, giving a more comprehensive depiction of the US economy during this half of the century. The results point towards a constant increase of competition after the opening of the US economy to international competition in the 1960–80s. Key determinants of profit persistence seem to be the firm's and industry size, industry growth, and more recently risk, advertising and exports.