Evolution of Profit Persistence in the US: Evidence from Three Periods

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.