The financial profile of the software industry between 1980 and 1994

The objective of this work is to trace the financial profile of firms in the software industry between the years 1980–1994 using data from COMPUSTAT. Our results are useful both to academics, who strive to link theory to empirical observation, and to practitioners trying to better understand the env...

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Bibliographic Details
Published in:Information and software technology 2000-08, Vol.42 (11), p.755-763
Main Authors: Chatzoglou, P.D, Vafeas, N
Format: Article
Language:English
Subjects:
Computer industry
Economic aspects
Financial ratio analysis
Financial ratios
Software
Software business management
Software industry
Statistical analysis
Studies
Surveys
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Summary:The objective of this work is to trace the financial profile of firms in the software industry between the years 1980–1994 using data from COMPUSTAT. Our results are useful both to academics, who strive to link theory to empirical observation, and to practitioners trying to better understand the environment in which they operate. Our analysis suggests that (1) the software industry has been steadily expanding over the sample period, (2) the relative market power of the industry leaders has remained fairly stable, (3) the median firm operating in the industry has became smaller through time, (4) firms have been spending increasingly more on R&D and less in capital investment through time, (5) profitability was declining over the first half of the sample period, stabilizing in the second half, and (6) the risk of bankruptcy for the median firm has similarly declined over the sample period.
ISSN:0950-5849
1873-6025
DOI:10.1016/S0950-5849(00)00116-6