The corporate sector as a net exporter of funds: Additional evidence

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. © 2010 Springer-Verlag New York.