The Devil Dwells in the Tails: A Quantile Regression Approach to Firm Growth
Journal of Evolutionary Economics, Vol. 20, No. 2, 2010, pp. 219-231
Posted: 21 Mar 2010 Last revised: 14 Apr 2010
Date Written: March 15, 2010
This paper explores firm growth rate distribution in a Gibrat’s Law context. It is novel in two respects. First, rather than limiting the analysis to a focus on the conditional mean, we investigate the entire shape of the distribution. Second, we show that differences in the firm growth rate process between large and small firms are highly circumstantial and depend on the industry dynamics. The data used include more than 9,000 Danish manufacturing, services and construction firms. We provide robust evidence indicating that firm growth studies should concentrate less on explaining means and instead focus on other parts of the firm growth rate distribution.
Keywords: Firm growth, Quantile regression, Distribution shape
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