EconPapers    
Economics at your fingertips  
 

Firm Size and Growth Rate Variance: the Effects of Data Truncation

Marco Capasso and Elena Cefis

No 10-23, Working Papers from Utrecht School of Economics

Abstract: This paper discusses the effects of the existence of natural and/or exogenously imposed thresholds in firm size distributions, on estimations of the relation between firm size and variance in firm growth rates. We explain why the results in the literature on this relationship are not consistent. We argue that a natural threshold (0 number of employees or 0 total sales) and/or the existence of truncating thresholds in the dataset, can lead to upwardly biased estimations of the relation. We show the potential impact of the bias on simulated data, suggest a methodology to improve these estimations, and present an empirical analysis based on a comprehensive dataset of Dutch manufacturing and service firms. The only stable relation between firm size and growth rate variance is negative regardless of how we define the measure of firm growth.

Keywords: firm’s growth; growth rates variance; truncation; thresholds; Ordered by external client (search for similar items in EconPapers)
Date: 2010-11
New Economics Papers: this item is included in nep-bec, nep-cis, nep-com, nep-ent, nep-sbm and nep-tid
References: Add references at CitEc
Citations:

Downloads: (external link)
https://dspace.library.uu.nl/bitstream/handle/1874/309380/10_23.pdf (application/pdf)

Related works:
Journal Article: Firm Size and Growth Rate Variance: The Effects of Data Truncation (2012) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:use:tkiwps:1023

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Papers from Utrecht School of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Marina Muilwijk ().

 
Page updated 2024-07-12
Handle: RePEc:use:tkiwps:1023