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Are differences in firm size transitory or permanent?

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Author Info
G. Urga (London School of Economics, UK)
P. A. Geroski (Dept. of Economics, London Business School, Sussex Place, Regents Park, London, NW1 4SA, UK)
S. Lazarova (London Business School, UK)
C. F. Walters (City University Business School, UK)

Additional information is available for the following registered author(s):

Abstract

Previous empirical work on corporate growth rates using cross-section or short-panel econometric techniques suggests that growth rates are random but that some degree of mean reversion exists. This means that size differences between firms are transitory. Another, more natural way to explore the long-run distribution of firm sizes is to examine data on the growth of particular firms over long periods of time. Using a sample of 147 UK firms observed continually for more than 30 years, our conclusions are that growth rates are highly variable over time and that differences in growth rates between firms do not persist for very long. Further, firms show no tendency to converge to either a common size or to a pattern of stable size differences over time. These results are compared and contrasted with standard approaches that suggest that firms reach and maintain stable positions in a skewed size distribution. Copyright © 2002 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/jae.676
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Article provided by John Wiley & Sons, Ltd. in its journal Journal of Applied Econometrics.

Volume (Year): 18 (2003)
Issue (Month): 1 ()
Pages: 47-59
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Handle: RePEc:jae:japmet:v:18:y:2003:i:1:p:47-59

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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Saripalle, Madhuri, 2006. "Learning across policy regimes: The impact of protection vis-à-vis competition in the Indian automotive industry," MPRA Paper 1701, University Library of Munich, Germany. [Downloadable!]
  2. Rabah Amir & Filomena Garcia & Malgorzata Knauff, 2006. "Endogenous Heterogeneity in Strategic Models: Symmetry-breaking via Strategic Substitutes and Nonconcavities," Working Papers 2006/29, Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon.. [Downloadable!]
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  3. John Goddard & David McMillan & John O. S. Wilson, 2006. "Do firm sizes and profit rates converge? Evidence on Gibrat's Law and the persistence of profits in the long run," Applied Economics, Taylor and Francis Journals, vol. 38(3), pages 267-278, February. [Downloadable!] (restricted)
  4. G. Urga & P. A. Geroski & S. Lazarova & C. F. Walters, 2003. "Are differences in firm size transitory or permanent?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(1), pages 47-59. [Downloadable!]
    Other versions:
  5. Matteo Richiardi, 2003. "Generalizing Gibrat. Reasonable Multiplicative Models of Firm Dynamics," Industrial Organization 0304004, EconWPA. [Downloadable!]
    Other versions:
  6. Elena Cefis & Matteo Ciccarelli & Luigi Orsenigo, 2004. "Testing Gibrat's Legacy: A Bayesian Approach to Study the Growth of Firms," Working Papers 05-02, Utrecht School of Economics. [Downloadable!]
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  7. Giulio Bottazzi & Giovanni Dosi & Marco Lippi & Fabio Pammolli & Massimo Riccaboni, 2001. "Innovation and Corporate Growth in the Evolution of the Drug Industry," LEM Papers Series 2001/02, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy. [Downloadable!]
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  8. Aslan, Alper, 2008. "Testing Gibrat’s law: empirical evidence from panel unit root tests of turkish firms," MPRA Paper 10594, University Library of Munich, Germany. [Downloadable!]
  9. Elena Cefis & Luigi Orsenigo & Matteo Ciccarelli, 2002. "From Gibrat'S Legacy To Gibrat'S Fallacy. A Bayesian Approach To Study The Growth Of Firms," Working Papers. Serie AD 2002-19, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
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  10. Michael Pfaffermayr, 2000. "The Impact of Internationalised Production on the Domestic Growth of Firms," Austrian Economic Quarterly, WIFO, vol. 5(1), pages 25-33, February. [Downloadable!] (restricted)
  11. Blandina Oliveira & Adelino Fortunato, 2008. "The dynamics of the growth of firms: evidence from the services sector," Empirica, Springer, vol. 35(3), pages 293-312, July. [Downloadable!] (restricted)
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  12. Marco Corsino, 2008. "Product Innovation and Growth: The Case of Integrated Circuits," LEM Papers Series 2008/02, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy. [Downloadable!]
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  13. Renata Kosova & Francine Lafontaine, 2006. "Firm Survival and Growth in Retail and Service Industries: Evidence from Franchised Chains," Working Papers 0007, School of Business, The George Washington University. [Downloadable!]
  14. Roy Thurik & Enrico Santarelli & David Audretsch & Luuk Klomp, 2002. "Gibrat's Law: Are the Services Different?," Scales Research Reports H200201, EIM Business and Policy Research. [Downloadable!]
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  15. Geroski, Paul A & Gugler, Klaus Peter, 2001. "Corporate Growth Convergence in Europe," CEPR Discussion Papers 2838, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  16. Matteo Richiardi, 2003. "Generalizing Gibrat Reasonable Stochastic Multiplicative Models of Firm Dynamics with Entry and Exit," LABORatorio R. Revelli Working Papers Series 21, LABORatorio R. Revelli, Centre for Employment Studies. [Downloadable!]
  17. A. Arrighetti & A. Ninni, 2009. "Firm size and growth opportunities: a survey," Economics Department Working Papers 2009-EP05, Department of Economics, Parma University (Italy). [Downloadable!]
  18. P. Hart, 2000. "Theories of Firms' Growth and the Generation of Jobs," Review of Industrial Organization, Springer, vol. 17(3), pages 229-248, November. [Downloadable!] (restricted)
  19. Christian Bayer, 2004. "Aggregate investment dynamics when firms face fixed investment cost and capital market imperfections," Macroeconomics 0411018, EconWPA. [Downloadable!]
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  20. Blandina Oliveira & Adelino Fortunato, 2006. "Testing Gibrat’s Law: Empirical Evidence from a Panel of Portuguese Manufacturing Firms," International Journal of the Economics of Business, Taylor and Francis Journals, vol. 13(1), pages 65-81, February. [Downloadable!] (restricted)
  21. Emiliano Santoro, 2006. "Macroeconomic fluctuations and the firms' rate of growth distribution: evidence from UK and US quoted companies," Department of Economics Working Papers 0606, Department of Economics, University of Trento, Italia. [Downloadable!]
  22. Michael Böheim & Michael Pfaffermayr & Klaus Gugler, 2000. "Do Growth Rates Differ in European Manufacturing Industries?," Austrian Economic Quarterly, WIFO, vol. 5(2), pages 93-104, May. [Downloadable!] (restricted)
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