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On the distributional properties of size, profit and growth of Icelandic firms

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  • Einar Erlingsson

    ()

  • Simone Alfarano
  • Marco Raberto
  • Hlynur Stefánsson

Abstract

In this paper, we analyze the distributional properties of the balance sheets of Icelandic firms by performing an empirical analysis of total assets, profit rates and growth rates using a data set of 2,818 Icelandic firms during the period 2000–2009. We find that the firms size measure, i.e. total assets, have the same heavy tail characteristics as various studies have shown, e.g. for US and Italian firms. The heavy tail nature of the total assets distribution seems to be robust w.r.t. a boom-bust cycle of the economy as well as special characteristics of Icelandic firms, e.g. their relatively small size and private ownership. Another important finding is that the profit rates, or return on assets, of Icelandic firms follow a Laplace like distribution similar to US firms. Additionally, we identified deviations from the distributional regularities, namely the power law behavior of firms’ size and Laplacian distributions of growth and profit rates, during the booming period of the economy 2005–2007. Copyright Springer-Verlag 2013

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Bibliographic Info

Article provided by Springer in its journal Journal of Economic Interaction and Coordination.

Volume (Year): 8 (2013)
Issue (Month): 1 (April)
Pages: 57-74

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Handle: RePEc:spr:jeicoo:v:8:y:2013:i:1:p:57-74

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Web page: http://www.springer.com/economics/economic+theory/journal/11403

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Related research

Keywords: Firm size; Profit rates; Growth rates; Power law; Laplace distribution; Icelandic firms; C12; D01; D22;

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  1. Stewart C. Myers, 1984. "Capital Structure Puzzle," NBER Working Papers 1393, National Bureau of Economic Research, Inc.
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  4. Myers, Stewart C., 1984. "Capital structure puzzle," Working papers, Massachusetts Institute of Technology (MIT), Sloan School of Management 1548-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
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Cited by:
  1. Mundt, Philipp & Förster, Niels & Alfarano, Simone & Milakovi?, Mishael, 2014. "The real versus the financial economy: A global tale of stability versus volatility," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 8(17), pages 1-26.
  2. ARATA Yoshiyuki, 2014. "Firm Growth Dynamics: The importance of large jumps," Discussion papers, Research Institute of Economy, Trade and Industry (RIETI) 14033, Research Institute of Economy, Trade and Industry (RIETI).
  3. Metzig, Cornelia & Gordon, Mirta B., 2014. "A model for scaling in firms’ size and growth rate distribution," Physica A: Statistical Mechanics and its Applications, Elsevier, Elsevier, vol. 398(C), pages 264-279.

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