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Equity Rates of Return in the UK — Evidence From Panel Data*

Published online by Cambridge University Press:  17 August 2016

Colin Mayer  and
Shirley Meadowcroft
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Extract

There are few issues in the economics of the firm that have generated as much controversy and discussion as the measurement of profitability. Accountants remain sharply divided about the appropriate techniques for adjusting for inflation while in the background economists question the fundamental principles of accounting and fail to agree on whether informative indicators can be constructed at all (see Kay (1976), Fisher and McGowan (1983), Harcourt (1965), Kay and Mayer (1984) for a taste of this debate). Much of this discussion has been highly misconceived and it is a basic contention of this paper, as described in section I, that accounting figures are indeed relevant for answering a range of economically interesting questions and a desirable method of adjusting for inflation is both well defined and simple to apply in practice.

Type
Part Four: Measurement of Capital Utilisation and Rates of Return
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 50 , Issue 3-4 , 1984 , pp. 363 - 398
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 1984 

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Footnotes

(*)

This paper is part of an Institute for Fiscal Studies project on Fiscal Policy in the Corporate Sector. The project is financed by the E.S.R.C. and the Esmee Fairbairn Charitable Trust.

(**)

Colin Mayer is a Fellow of St. Anne’s College, Oxford and a Research Associate of the I.F.S.. Shirley Meadowcroft is a Research Officer at the I.F.S., 180/182 Tottenham, Court Road, London W1P 9LF.

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