One explanation identified by the study is that strong profitability from assets companies already own does not necessarily make a new investment equally attractive. Its analysis found evidence that the initial returns associated with fresh fixed-asset investment have weakened in the post-pandemic period, putting downward pressure on what the paper calls “marginal profitability”. One explanation identified by the study is that strong profitability from assets companies already own does not necessarily make a new investment equally attractive. Its analysis found evidence that the initial returns associated with fresh fixed-asset investment have weakened in the post-pandemic period, putting downward pressure on what the paper calls “marginal profitability”.
