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A Closer Look at Serial Growth Rate Correlation

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  • Alex Coad

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Abstract

Serial correlation in annual growth rates carries a lot of information on growth pro-cesses – it allows us to directly observe firm performance as well as to test theories. Using a 7-year balanced panel of 10 000 French manufacturing firms, we observe that small firms typically are subject to negative correlation of annual growth rates, whereas larger firms display positive correlation. Furthermore, we find that those small firms that experience extreme positive or negative growth in any one year are unlikely to repeat this performance in the following year

(This abstract was borrowed from another version of this item.)

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File URL: http://hdl.handle.net/10.1007/s11151-007-9135-y
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Bibliographic Info

Article provided by Springer in its journal Review of Industrial Organization.

Volume (Year): 31 (2007)
Issue (Month): 1 (August)
Pages: 69-82

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Handle: RePEc:kap:revind:v:31:y:2007:i:1:p:69-82

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Web page: http://www.springerlink.com/link.asp?id=100336

Related research

Keywords: Serial correlation; Firm growth; Quantile regression; French manufacturing; Fast-growth firms; L11; L25;

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References

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  1. 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.
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  3. Kumar, M S, 1985. "Growth, Acquisition Activity and Firm Size: Evidence from the United Kingdom," Journal of Industrial Economics, Wiley Blackwell, vol. 33(3), pages 327-38, March.
  4. Mahmut Yasar & Carl H. Nelson & Roderick Rejesus, 2003. "Productivity and Exporting Status of Manufacturing Firms: Evidence from Quantile Regressions," Emory Economics 0323, Department of Economics, Emory University (Atlanta).
  5. Mariana Mazzucato & Paul A Geroski, 2001. "Learning and the Sources of Corporate Growth," Open Discussion Papers in Economics 43, The Open University, Faculty of Social Sciences, Department of Economics.
  6. Giulio Bottazzi & Elena Cefis & Giovanni Dosi, 2002. "Corporate growth and industrial structures: some evidence from the Italian manufacturing industry," Industrial and Corporate Change, Oxford University Press, vol. 11(4), pages 705-723, August.
  7. repec:hal:cesptp:hal-00261616 is not listed on IDEAS
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  9. Geroski, Paul A & Machin, Stephen & Walters, Christopher F, 1997. "Corporate Growth and Profitability," Journal of Industrial Economics, Wiley Blackwell, vol. 45(2), pages 171-89, June.
  10. Alex Coad, 2006. "Towards an explanation of the exponential distribution of firm growth rates," Cahiers de la Maison des Sciences Economiques r06025, Université Panthéon-Sorbonne (Paris 1).
  11. Giulio Bottazzi & Elena Cefis & Giovanni Dosi & Angelo Secchi, 2003. "Invariances and Diversities in the Evolution of Manufacturing Industries," LEM Papers Series 2003/21, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  12. Ericson, Richard & Pakes, Ariel, 1995. "Markov-Perfect Industry Dynamics: A Framework for Empirical Work," Review of Economic Studies, Wiley Blackwell, vol. 62(1), pages 53-82, January.
  13. Alex Coad & Rekha Rao, 2006. "Innovation and Firm Growth in High-Tech Sectors: A Quantile Regression Approach," LEM Papers Series 2006/18, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  14. Michael Binder, Cheng Hsiao, and M. Hashem Pesaran, 2001. "Estimation and Inference in Short Panel Vector Autoregressions with Unit Roots and Cointegration," Computing in Economics and Finance 2001 36, Society for Computational Economics.
  15. Giulio Bottazzi & Alex Coad & Nadia Jacoby & Angelo Secchi, 2011. "Corporate growth and industrial dynamics: evidence from French manufacturing," Applied Economics, Taylor & Francis Journals, vol. 43(1), pages 103-116.
  16. Friedman, Milton, 1992. "Do Old Fallacies Ever Die?," Journal of Economic Literature, American Economic Association, vol. 30(4), pages 2129-32, December.
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  21. Francesca Lotti & Enrico Santarelli & Marco Vivarelli, 2003. "Does Gibrat's Law hold among young, small firms?," Journal of Evolutionary Economics, Springer, vol. 13(3), pages 213-235, August.
  22. Alex Coad, 2006. "Understanding the processes of firm Growth - a closer look at serial growth rate correlation," Cahiers de la Maison des Sciences Economiques r06051, Université Panthéon-Sorbonne (Paris 1).
  23. Giulio Bottazzi & Angelo Secchi, 2005. "Explaining the Distribution of Firms Growth Rates," LEM Papers Series 2005/16, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  24. Alex Coad, 2007. "A Closer Look at Serial Growth Rate Correlation," Review of Industrial Organization, Springer, vol. 31(1), pages 69-82, August.
  25. Geroski, Paul A, 1999. "The Growth of Firms in Theory and in Practice," CEPR Discussion Papers 2092, C.E.P.R. Discussion Papers.
  26. Chesher, Andrew, 1979. "Testing the Law of Proportionate Effect," Journal of Industrial Economics, Wiley Blackwell, vol. 27(4), pages 403-11, June.
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