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The valuation of organization capital

Figure 5 explains this puzzle. It tracks the relationship between sales/invested capital and mark-ups for superstar firms and others.

Figure 5 Sales/invested capital ratio vs mark-ups

Source: Ayyagari et al. (2018).

At high mark-ups all firms reduce sales to invested capital, but superstar firms consistently produce more than other firms with the same mark-up. Together with Figure 4, which shows that a large fraction of superstar firms have relatively low mark-ups, this suggests that firms do not make high profits by restricting output. They are as likely to have high productivity, or to be adopting a high output strategy. In our paper, we present regression evidence to support the conclusions drawn from the figures and discuss alternative measurement and modelling assumptions in our computations. 

Overall, after adjusting for intellectual and organisational capital, we find little evidence that there is increasing inequality across listed firms in the US. Pricing power, as measured by mark-ups, predicts higher ROIC across firms. However, both the distribution of mark-ups and the relatively higher output for a given mark-up for superstar firms suggest that changes in mark-ups due to a reduction in competition are not the prime determinants of superstar firm status.