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The Present Value of Future Market Power

Thummim Cho et al.

The Review of Financial Studies2026https://doi.org/10.1093/rfs/hhaf112article
FT50UTD24AJG 4*ABDC A*
Weight
0.50

Abstract

We introduce a present-value identity relating a firm’s market value to expected future markups, output growth, discount rates, and investments. Distinguishing current from expected markups reveals five empirical facts: (1) Expected markups account for half the rise in U.S. firm values since 1980. (2) The rise in aggregate expected markups reflects market-share reallocation toward high-expected-markup firms and within-firm increases. (3) Expected markups are linked to intangible investments. (4) They relate negatively to discount rates over time but (5) positively to abnormal returns across firms. Finally, variation in long-term expected markups is primarily associated with asset prices rather than current markups.

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https://doi.org/https://doi.org/10.1093/rfs/hhaf112

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@article{thummim2026,
  title        = {{The Present Value of Future Market Power}},
  author       = {Thummim Cho et al.},
  journal      = {The Review of Financial Studies},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1093/rfs/hhaf112},
}

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The Present Value of Future Market Power

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

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