The Value Gap: Europe Cannot Scale
The US-Europe listed-firm valuation gap has widened from roughly one-third in 2008 to over 300 percent — $34 trillion — by 2023, concentrated in R&D-intensive, high-scalability industries, and driven by financing frictions rather than demand.
Summary
Becker, Benmelech, and Monteiro document that the aggregate market-value gap between US- and European-listed firms grew from about one-third in 2008 to more than 300 percent ($34 trillion) by 2023, with the gap most pronounced in R&D-intensive, high-scalability sectors. They find European firm size correlates strongly with home-country GDP, while US firm size does not — evidence that European firms stay tethered to domestic market scale. Smaller
Editor's opinion
The US-Europe listed-firm valuation gap has widened from roughly one-third in 2008 to over 300 percent — $34 trillion — by 2023, concentrated in R&D-intensive, high-scalability industries, and
Key concepts
Firm scaling · cost of capital · financing frictions · market valuation gap