Size is also related to profitability.Controlling for book-to-market equity,small firms tend to have lower earnings on assets than big firms. The size effect in earnings,however,is largely due to the 1980s.Until 1981,controlling for BE/ME,small firms are only slightly less profitable than big firms.But for small firms,the 1980-1982 recession turns into a prolonged earnings depression.For some reason,small firms do not participate in the economic boom of the middle and late 1980s.