As organizations have grown in size and scope, innovative financing techniques have made it more difficult for outside investors to understand a particular firm's risk profile and the performance of its various lines of business. Traditional accounting standards have not kept pace with the risk-management tools employed by sophisticated corporations.
And they are often funded by equity, not debt, so financial intermediaries are not at risk. The gains to aggregate economic activity from successful innovation – as in the high-tech case – are realized over time. When overinvestment occurs, market returns respond, new investment slows, and the capital stock eventually adjusts. In the end, productivity is higher than it would have been otherwise.