The Growth of Firms
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The Growth of Firms

A Survey of Theories and Empirical Evidence

Alex Coad

Much progress has been made in empirical research into firm growth in recent decades due to factors such as the availability of detailed longitudinal datasets, more powerful computers and new econometric techniques. This book provides an up-to-date catalogue of empirical work, as well as a coherent theoretical structure within which these new results can be interpreted and understood. It brings together a large body of recent research on firm growth from a multidisciplinary perspective, providing an up-to-date synthesis of stylized facts and empirical regularities. Numerous empirical findings and theories of firm growth are also surveyed and compared in order to evaluate their validity.
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Alex Coad


CHAPTER 1 1. Note also that, in a very small number of cases, value-added can take on negative values. This would be the case, for instance, of a firm that sells goods for less than the cost of labour. CHAPTER 2 1. This logarithmic approximation is only justified if et is ‘small’ enough (i.e. close to zero), which can be reasonably assumed by taking a short time period (Sutton, 1997). 2. Note, however, that if reversion to the mean is observed (i.e. that small firms grow faster than large firms) then the variance of a firm growth process operating through multiplicative shocks need not approach infinity (Hart and Pearce, 1986). 3. The skewed age distribution in the sample of small firms in Coad and Tamvada (2008) provides a unique illustration of the fact that not all small firms are young. 4. This condition is trivial since the duration of a Gibrat-type ‘shock’ can be made arbitrarily short. CHAPTER 3 1. The observed Subbotin b parameter (the ‘shape’ parameter) is significantly lower than the Laplace value of 1. This highlights the importance of following Bottazzi et al. (2002) and considering the Laplace as a special case in the Subbotin family of distributions. 2. Growth rates calculated by taking log-differences correspond to log growth rates, as explained in section 1.3 in Chapter 1. 3. This model made earlier appearances as Bottazzi and Secchi (2003b) and Bottazzi and Secchi (2003c). 4. Here are a few possible examples. Slack may be present because indivisibilities...

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