Proxies in place, the team dove into the data and came up with surprising results: Between 2002 and 2007 (the years covered by the database), public firms increased their gross fixed assets (as a percentage of total assets) by 4.0 percent a year on average versus 9.7 percent at similar private firms.
They say U.S. policymakers will need to lift taxes and cut spending to balance the federal budget, which has swung from a surplus of 2.5 percent of gross domestic product (GDP) in 2000 to a deficit of just under 4 percent in 2003.
Today an investor can obtain the same net return with a lower gross (expected) return because that portion required as compensation for costs has been reduced.