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An appraisal of firm size distribution: Does sample size matter?

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  • Segarra, Agustí
  • Teruel, Mercedes

Abstract

Recent empirical evidence based on extensive databases shows that firm size distributions (FSD) vary with the sample. This paper analyses the effect of sample size on the FSD of Spanish manufacturing firms for the years 2001 and 2006. We use a comprehensive dataset that has two measures of firm size: sales and employment. Our database shows a skewed FSD to the right which there are numerous small firms and a few large firms. Applying a rolling regression to control for sample size developed by Peng (2010), we show the existence of a non-constant power-law distribution that depends on the sampling size. Furthermore, the FSD of employees is more sensitive to firm age than the FSD of sales.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:jeborg:v:82:y:2012:i:1:p:314-328
    DOI: 10.1016/j.jebo.2012.02.012
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    1. repec:eee:phsmap:v:481:y:2017:i:c:p:265-275 is not listed on IDEAS
    2. Omar Blanco Arroyo & Simone Alfarano, 2017. "Granularity of the Business Cycle Fluctuations: The Spanish Case," Economía Coyuntural,Revista de temas de perspectivas y coyuntura, Instituto de Investigaciones Económicas y Sociales 'José Ortiz Mercado' (IIES-JOM), Facultad de Ciencias Económicas, Administrativas y Financieras, Universidad Autónoma Gabriel René Moreno, vol. 2(1), pages 31-58.
    3. Hohler, Julia & Kuhl, Rainer, 2014. "Do Growth Rates Depend On The Initial Firm Size? Evidence For The German Agribusiness," 54th Annual Conference, Goettingen, Germany, September 17-19, 2014 187593, German Association of Agricultural Economists (GEWISOLA).
    4. Bee, Marco & Riccaboni, Massimo & Schiavo, Stefano, 2017. "Where Gibrat meets Zipf: Scale and scope of French firms," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 481(C), pages 265-275.
    5. Guo, Jinzhong & Xu, Qi & Chen, Qinghua & Wang, Yougui, 2013. "Firm size distribution and mobility of the top 500 firms in China, the United States and the world," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 392(13), pages 2903-2914.
    6. Höhler, Julia & Kuhl, Rainer, 2014. "Corporations in an evolving competitive environment - evidence for the German agribusiness," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182689, European Association of Agricultural Economists.

    More about this item

    Keywords

    Firm size distribution; Power-laws; Truncation point;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • C16 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Econometric and Statistical Methods; Specific Distributions

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