No correlation between investments and profitability in Swedish industry? A study of industrial dynamics in Sweden 1975-1995

Citation
C. Edquist et H. Sjogren, No correlation between investments and profitability in Swedish industry? A study of industrial dynamics in Sweden 1975-1995, EKON SAMF T, 51(2), 1998, pp. 123
Citations number
14
Categorie Soggetti
Economics
Journal title
EKONOMISKA SAMFUNDETS TIDSKRIFT
ISSN journal
00133183 → ACNP
Volume
51
Issue
2
Year of publication
1998
Database
ISI
SICI code
0013-3183(1998)51:2<123:NCBIAP>2.0.ZU;2-G
Abstract
One of the most basic functions of the capital market is to transfer resour ces from savers to investors - which includes movements of capital over tim e and between geographical regions and sectors of production. Investments a re generally assumed to enhance economic growth. Therefore a more precise w ay to investigate the efficiency of capital markets is to test the hypothes is whether Swedish material investments are made in those sectors which sho w the highest profitability. Our conclusion is that there has, generally sp eaking, not been a long-term correlation between a high rate of investment and a high profitability during the latest twenty years in Sweden. An excep tion is the most profitable sectors of industry. In addition, our investiga tion points to a short-term correlation between investments and profitabili ty.