Abstract
Using aggregate data, Schwartz and Aronson (1966) documented the role of the corporate sector in generating more funds than it can profitability use over 40 years from 1924–1964. One of the primary issues behind the corporate sector exporting funds was the controversy of dividends. Schwartz and Aronson noted that aggregate dividends far exceeded net new external financing. In this study, we present evidence for the 1971–2006 period for all stocks covered by the Compustat tapes, some 200,000 firms (approximately 2,300–6,000 firms per year). We substantiate the original Schwartz and Aronson hypothesis of the corporate sector as a net exporter of funds and offer additional evidence as to how the components of the net exporter sector calculations have evolved over time. We address additional questions with regard to debt and equity issuances, repurchases, the relationship of dividends and stock prices, and whether significant sector effects are present.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
References
Bierman, Jr., H. (2001). Increasing Shareholder Value: Distribution Policy, a Corporate Finance Challenge, Boston: Kluwer Academic Publishers.
Bierman Jr., H. (2001). “Valuation of Stocks with Extraordinary Growth Prospects.” Journal of Investing, 10, 23–26.
Brealey, R., Myers, S.C., & Allen, F. (2005). Principles of Corporate Finance, New York: McGraw-Hill/Irwin.
Dann, L. (1981). “Common Stock Repurchases: An Analysis of Returns to Bondholders and Stockholders,” Journal of Financial Economics, 9, 115–38.
Dhrymes, P.J. (1974). Econometrics: Statistical Foundations and Applications, New York: Springer-Ver1ag.
Dhrymes, P.J., & Kurz, M. (1967). “Investment, Dividends, and External Finance Behavior of Firms,” in Robert Ferber (Ed.), Determinants of Investment Behavior, New York: Columbia University Press.
Fama, E.F. (1974). “The Empirical Relationship Between the Dividend and Investment Decisions of Firms,” American Economic Review, 63, 304–18.
Fama, E.F., & Babiak, H. (1968). “Dividend Policy: An Empirical Analysis,” Journal of the American Statististical Association, 63, 1132–61.
Grabowski, H.G., & Mueller, D.C. (1972). “Managerial and Stockholder Welfare Models of Firm Expenditures,” Review of Economics and Statistics, 54, 9–24.
Guerard, Jr., J.B., Bean, A.S., & Andrews, S. (1987). “R&D Management and Corporate Financial Policy,”Management Science, 33, 1419–27.
Guerard, Jr., J.B., & McCabe, G.M. (1992). “The Integration of Research and Development Management into the Firm Decision Process,” in D.F. Kocaoglu (Ed.), The Management of R&D and Engineering, Amsterdam: North-Holland.
Guerard, Jr., J.B., & Schwartz, E. (2007). Quantitative Corporate Finance, New York: Springer.
Higgins, R.C. (1972). “The Corporate Dividend-Saving Decision,” Journal of Financial and Quantitative Analysis, 7, 1527–41.
Jalilvand, A., & Harris, R.S. (1984). “Corporate Behavior in Adjusting to Capital Structure and Dividend Targets: An Econometric Study,” Journal of Finance, 39, 127–45.
Kuh, E. (1963). Capital Stock Growth: A Micro-Econometric Approach, Amsterdam: North-Holland.
Lakonishok, J., & Vermaelen, T. (1990). “Anomalous Price Behavior Around Repurchase Tender Offers,” Journal of Finance, 45, 455–77.
Lintner, J. (1956). “Distributions of Incomes of Corporations Among Dividends, Retained Earnings and Taxes,” American Economic Review, 46, 97–118.
Meyer, J.R., & Kuh, E. (1957), The Investment Decision, Cambridge: Harvard University Press.
McCabe, G.M. (1979). “The Empirical Relationship Between Investment and Financing: A New Look,” Journal of Financial and Quantitative Analysis, 14, 119–35.
McDonald, J.G., Jacquillat, B., & Nussenbaum, M. (1975). “Dividend, Investment, and Financial Decisions: Empirical Evidence on French Firms,” Journal of Financial and Quantitative Analysis, 10, 741–55.
Miller, M., & Modigliani, F. (1961). “Dividend Policy, Growth, and the Valuation of Shares,” Journal of Business, 34, 411–33.
Montgomery, A.L., Zarnowitz, V., Tsay, R.S., & Tiao, G.C. (1998). “Forecasting the U.S. Unemployment Rate,” Journal of the American Statistical Association, 93, 478–93.
Mueller, D.C. (1967). “The Firm Decision Process: An Econometric Investigation,” Quarterly Journal of Economics, 81, 58–87.
Peterson, P., & Benesh, G. (1983). “A Reexamination of the Empirical Relationship Between Investment and Financing Decisions,” Journal of Financial and Quantitative Analysis, 18, 439–54.
Schwartz, E., & Aronson, J.R. (1966). “The Corporate Sector: A Net Exporter of Funds” Southern Economic Journal, 33, 252–57.
Schwartz, E., & Aronson, J.R. (1967). “The Corporate Sector: A Net Exporter of Funds: Reply” Southern Economic Journal, 34, 153–54.
Switzer, L. (1984). “The Determinants of Industrial R&D: A Funds Flow Simultaneous Equation Approach,” Review of Economics and Statistics, 66, 163–68.
Tinbergen, J. (1938). “Statistical Evidence on the Accelerator Principle,” Econometrica, 10, 164–176.
Tinbergen, J. (1938). Statistical Testing of Business Cycles, Geneva: The League of Nations.
Zarnowitz, V. (2001). “The Old and the New in the U.S. Economic Expansion,” The Conference Board. EPWP #01–01.
Zarnowitz, V. (1992). Business Cycles: Theory, History, Indicators, and Forecasting, Chicago: University of Chicago Press.
Zarnowitz, V., & Ozyildirim, A. (2001). “On the Measurement of Business Cycles and Growth Cycles,” Indian Economic Review, 36, 34–54.
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2008 Martindale Center for the Study of Private Enterprise, Lehigh University
About this chapter
Cite this chapter
Guerard, J.B. (2008). The Corporate Sector as a Net Exporter of Funds: Additional Evidence. In: Aronson, J., Parmet, H., Thornton, R. (eds) Variations in Economic Analysis. Springer, New York, NY. https://doi.org/10.1007/978-1-4419-1182-7_4
Download citation
DOI: https://doi.org/10.1007/978-1-4419-1182-7_4
Published:
Publisher Name: Springer, New York, NY
Print ISBN: 978-1-4419-1181-0
Online ISBN: 978-1-4419-1182-7
eBook Packages: Business and EconomicsEconomics and Finance (R0)