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Changes of firm size distribution: The case of Korea

Sang Hoon Kang, Zhuhua Jiang, Chongcheul Cheong and Seong-Min Yoon ()

Physica A: Statistical Mechanics and its Applications, 2011, vol. 390, issue 2, 319-327

Abstract: In this paper, the distribution and inequality of firm sizes is evaluated for the Korean firms listed on the stock markets. Using the amount of sales, total assets, capital, and the number of employees, respectively, as a proxy for firm sizes, we find that the upper tail of the Korean firm size distribution can be described by power-law distributions rather than lognormal distributions. Then, we estimate the Zipf parameters of the firm sizes and assess the changes in the magnitude of the exponents. The results show that the calculated Zipf exponents over time increased prior to the financial crisis, but decreased after the crisis. This pattern implies that the degree of inequality in Korean firm sizes had severely deepened prior to the crisis, but lessened after the crisis. Overall, the distribution of Korean firm sizes changes over time, and Zipf’s law is not universal but does hold as a special case.

Keywords: Rank distribution; Power-law distribution; Zipf exponent; Zipf’s law; Financial crisis (search for similar items in EconPapers)
Date: 2011
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