Firm Size Distribution and the Survival Bias

Antonio Palestrini ()

Economics Bulletin, 2015, vol. 35, issue 3, 1630-1637

Abstract: In this work, using the simple Kesten's process, I investigate the survival bias of the firm size distribution selecting a cohort of surviving firms. This work shows that the modified Kesten's process - in which firms exit when their size (measured as equity) cross the barrier (go bankrupt) - produces a limit distribution of the cohort more symmetric. This result provides a benchmark at comparing the distribution produced by economic models studying surviving firms.

Keywords: Firms' size distribution; multiplicative processes; survival bias. (search for similar items in EconPapers)
JEL-codes: D3 L1 (search for similar items in EconPapers)
Date: 2015-07-24
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Citations: View citations in EconPapers (1)

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