Size Distribution of Portuguese Firms between 2006 and 2012

Mário Augusto (), Rui Pascoal and Ana Margarida Monteiro ()
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Mário Augusto: Faculty of Economics, University of Coimbra, Portugal
Ana Margarida Monteiro: Faculty of Economics, University of Coimbra and GEMF, Portugal

No 2015-04, GEMF Working Papers from GEMF, Faculty of Economics, University of Coimbra

Abstract: This study aims to describe the size distribution of Portuguese firms, as measured by annual sales and total assets, between 2006 and 2012, giving an economic interpretation for the evolution of the distribution along the time. Three distributions are fitted to data: the lognormal, the Pareto (and as a particular case Zipf) and the Simplified Canonical Law (SCL). We present the main arguments found in literature to justify the use of distributions, emphasizing the interpretation of SCL coefficients and its analogy with thermodynamics. Methods of estimation include Maximum Likelihood, modified Ordinary Least Squares in log-log scale and Nonlinear Least Squares considering the Levenberg-Marquardt algorithm. We apply these approaches to Portuguese firm data. In the sales case, the evolution of estimated parameters in both lognormal and SCL reflects the existence of a recession period more pronounced after 2008.

Keywords: Firms size; lognormal law; Zipf's law; simplified canonical law; Shannon entropy. (search for similar items in EconPapers)
JEL-codes: C11 C13 C44 C58 C63 C87 G11 G32 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2015-02
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Published in Physica A: Statistical Mechanics and its Applications, 458(2016), 342-355

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Journal Article: Size distribution of Portuguese firms between 2006 and 2012 (2016)
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