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Varying Heterogeneity among U.S. Firms: Facts and Implications

Author Info

  • Hyunbae Chun

    (Sogang University)

  • Jung-Wook Kim

    (Seoul National University)

  • Randall Morck

    (University of Albert)

Abstract

U.S. firms' stock return volatility rose fivefold from 1971 through 2000 and then reverted to near 1971 levels by 2006. This was driven mainly by a rise and fall in the firm-specific, rather than systematic, component of volatility. Firm-level total factor productivity growth volatility exhibited a similar pattern. We hypothesize that firm heterogeneity, reflected in firm-specific volatility, rises as a new general purpose technology (GPT) propagates across the economy and then ebbs once the GPT is widespread. Measuring GPT adoption by information technology capital intensity, we find robust cross-industry empirical evidence supporting the hypothesis. © 2011 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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File URL: http://www.mitpressjournals.org/doi/pdf/10.1162/REST_a_00099
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Article provided by MIT Press in its journal Review of Economics and Statistics.

Volume (Year): 93 (2011)
Issue (Month): 3 (August)
Pages: 1034-1052

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Handle: RePEc:tpr:restat:v:93:y:2011:i:3:p:1034-1052
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  1. Chun, Hyunbae & Kim, Jung-Wook & Morck, Randall & Yeung, Bernard, 2008. "Creative destruction and firm-specific performance heterogeneity," Journal of Financial Economics, Elsevier, vol. 89(1), pages 109-135, July.
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Cited by:

  1. Hyunbae Chun & Jung-Wook Kim & Randall Morck, 2013. "Productivity Growth and Stock Returns: Firm- and Aggregate-Level Analyses," NBER Working Papers 19462, National Bureau of Economic Research, Inc.
  2. Chun, Hyunbae & Ha, Joonkyung & Kim, Jung-Wook, 2014. "Firm heterogeneity, R&D, and economic growth," Economic Modelling, Elsevier, vol. 36(C), pages 149-156.
  3. Marco Corsino & Enrico Zaninotto, 2012. "Revealing the influence of managerial practices and entrepreneurs' characteristics on hotel efficiency," DISA Working Papers 2012/03, Department of Computer and Management Sciences, University of Trento, Italy, revised May 2012.
  4. Chun, Hyunbae & Kim, Jung-Wook & Lee, Jason, 2015. "How does information technology improve aggregate productivity? A new channel of productivity dispersion and reallocation," Research Policy, Elsevier, vol. 44(5), pages 999-1016.

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