Channels of Size Adjustment and Firm Performance
AbstractWe use unique business register data for the United Kingdom to investigate the effects of different forms of firm expansion and contraction on firm-level performance indicators such as wages and productivity. We distinguish between adjustment of employment and turnover at existing establishments, expansions and contractions taking place via greenfield investment and disinvestment, and via acquisitions and sell-offs. We show that the choice of adjustment channel has important implications for the evolution of firm-level performance indicators. In terms of aggregate importance, we demonstrate that the two external adjustment forms (greenfield and M&A) account for at least 50% of the changes in aggregate wages, profits and productivity associated with firm expansions and contractions.
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Bibliographic InfoPaper provided by University of Essex, Department of Economics in its series Economics Discussion Papers with number 703.
Date of creation: 14 Dec 2011
Date of revision:
Postal: Discussion Papers Administrator, Department of Economics, University of Essex, Wivenhoe Park, Colchester CO4 3SQ, U.K.
Other versions of this item:
- E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
- G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-12-19 (All new papers)
- NEP-BEC-2011-12-19 (Business Economics)
- NEP-CSE-2011-12-19 (Economics of Strategic Management)
- NEP-EFF-2011-12-19 (Efficiency & Productivity)
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