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Re-examination of the size distribution of firms

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  • Taisei Kaizoji
  • Hiroshi Iyetomi
  • Yuichi Ikeda

Abstract

In this paper we address the question of the size distribution of firms. To this aim, we use the Bloomberg database comprising multinational firms within the years 1995-2003, and analyze the data of the sales and the total assets of the separate financial statement of the Japanese and the US companies, and make a comparison of the size distributions between the Japanese companies and the US companies. We find that (i) the size distribution of the US firms is approximately log-normal, in agreement with Gibrat's observation (Gibrat 1931), and in contrast (ii) the size distribution of the Japanese firms is clearly not log-normal, and the upper tail of the size distribution follows the Pareto law. It agree with the predictions of the Simon model (Simon 1955). Key words: the size distribution of firms, the Gibrat's law, and the Pareto law

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File URL: http://arxiv.org/pdf/physics/0512124
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Bibliographic Info

Paper provided by arXiv.org in its series Papers with number physics/0512124.

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Date of creation: Dec 2005
Date of revision: Mar 2006
Publication status: Published in Evolutionary and Institutional Economics Review 2-2 (2006)
Handle: RePEc:arx:papers:physics/0512124

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  1. Ijiri, Yuji & Simon, Herbert A, 1971. "Effects of Mergers and Acquisitions on Business Firm Concentration," Journal of Political Economy, University of Chicago Press, vol. 79(2), pages 314-22, March-Apr.
  2. Ijiri, Yuji & Simon, Herbert A, 1974. "Interpretations of Departures from the Pareto Curve Firm-Size Distributions," Journal of Political Economy, University of Chicago Press, vol. 82(2), pages 315-31, Part I, M.
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Cited by:
  1. Kang, Sang Hoon & Jiang, Zhuhua & Cheong, Chongcheul & Yoon, Seong-Min, 2011. "Changes of firm size distribution: The case of Korea," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 390(2), pages 319-327.
  2. Ivan O. Kitov, 2009. "What is the best firm size to invest?," Papers 0903.0286, arXiv.org.
  3. Segarra, Agustí & Teruel, Mercedes, 2012. "An appraisal of firm size distribution: Does sample size matter?," Journal of Economic Behavior & Organization, Elsevier, vol. 82(1), pages 314-328.

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