Why do stocks in the U.S. trade at a premium to the RoW? The below analysis from Goldman suggests high ROE's in the U.S. explains a significant portion of it. The S&P 500 is a quality index.

"Return on equity can explain 93% of the variation in sector-level P/B valuation across the S&P 500 and MSCI World ex. US."

“The ideal business is one that earns very high returns on capital and that keeps using lots of capital at those high returns. That becomes a compounding machine.” - Warren Buffett

“The higher return a business can earn on its capital, the more cash it can produce, the more value is created. Over time, it is hard for investors to earn returns that are much higher than the underlying business’ return on invested capital.” Warren Buffett

“Over the long run, it is a company’s return on capital, not changes in quarterly earnings, which primarily determines the direction of its share price. The return on capital of any company is largely subject to the state of competition within its industry.” - Marathon Asset Management