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

Author

Listed:
  • Einar Jón Erlingsson

    () (Reykjavik University)

  • Simone Alfarano

    () (Universitat Jaume I)

  • Marco Raberto

    () (DOGE.I, Università di Genova)

  • Hlynur Stefánssonn

    () (Reykjavik University)

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 2818 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 U.S. 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 U.S. 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.

Suggested Citation

  • Einar Jón Erlingsson & Simone Alfarano & Marco Raberto & Hlynur Stefánssonn, 2012. "On the distributional properties of size, profit and growth of Icelandic firms," Working Papers 2012/01, Economics Department, Universitat Jaume I, Castellón (Spain).
  • Handle: RePEc:jau:wpaper:2012/01
    as

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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. Halvarsson, Daniel, 2013. "Identifying High-Growth Firms," Ratio Working Papers 215, The Ratio Institute.
    2. Matthias Duschl & Shi-Shu Peng, 2013. "Chinese firm dynamics and the role of ownership type A conditional estimation approach of the Asymmetric Exponential Power (AEP) density," Papers on Economics and Evolution 2014-01, Philipps University Marburg, Department of Geography.
    3. ARATA Yoshiyuki, 2014. "Are There Any Empirical Regularities of Firms' Growth Patterns? The importance of large jumps," Discussion papers 14033, Research Institute of Economy, Trade and Industry (RIETI).
    4. Williams, Michael A. & Baek, Grace & Park, Leslie Y. & Zhao, Wei, 2016. "Global evidence on the distribution of economic profit rates," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 458(C), pages 356-363.
    5. 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, vol. 398(C), pages 264-279.
    6. 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 (IfW), vol. 8, pages 1-26.
    7. Williams, Michael A. & Pinto, Brijesh P. & Park, David, 2015. "Global evidence on the distribution of firm growth rates," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 432(C), pages 102-107.

    More about this item

    Keywords

    Firm size; Profit rates; Growth rates; Power law; Laplace distribution; Icelandic Firms;

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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