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Changes of firm size distribution: The case of Korea

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  • Kang, Sang Hoon
  • Jiang, Zhuhua
  • Cheong, Chongcheul
  • Yoon, Seong-Min

Abstract

In this paper, the distribution and inequality of firm sizes is evaluated for the Korean firms listed on the stock markets. Using the amount of sales, total assets, capital, and the number of employees, respectively, as a proxy for firm sizes, we find that the upper tail of the Korean firm size distribution can be described by power-law distributions rather than lognormal distributions. Then, we estimate the Zipf parameters of the firm sizes and assess the changes in the magnitude of the exponents. The results show that the calculated Zipf exponents over time increased prior to the financial crisis, but decreased after the crisis. This pattern implies that the degree of inequality in Korean firm sizes had severely deepened prior to the crisis, but lessened after the crisis. Overall, the distribution of Korean firm sizes changes over time, and Zipf’s law is not universal but does hold as a special case.

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Bibliographic Info

Article provided by Elsevier in its journal Physica A: Statistical Mechanics and its Applications.

Volume (Year): 390 (2011)
Issue (Month): 2 ()
Pages: 319-327

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Handle: RePEc:eee:phsmap:v:390:y:2011:i:2:p:319-327

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Web page: http://www.journals.elsevier.com/physica-a-statistical-mechpplications/

Related research

Keywords: Rank distribution; Power-law distribution; Zipf exponent; Zipf’s law; Financial crisis;

References

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  1. Fujiwara, Yoshi & Aoyama, Hideaki & Di Guilmi, Corrado & Souma, Wataru & Gallegati, Mauro, 2004. "Gibrat and Pareto–Zipf revisited with European firms," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 344(1), pages 112-116.
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  10. Zhang, Jianhua & Chen, Qinghua & Wang, Yougui, 2009. "Zipf distribution in top Chinese firms and an economic explanation," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 388(10), pages 2020-2024.
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Cited by:
  1. Guo, Jinzhong & Xu, Qi & Chen, Qinghua & Wang, Yougui, 2013. "Firm size distribution and mobility of the top 500 firms in China, the United States and the world," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 392(13), pages 2903-2914.

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