Gibrat's Law Redux: think profitability instead of growth
comunitat-uji-handle:10234/9
comunitat-uji-handle2:10234/8643
comunitat-uji-handle3:10234/8644
comunitat-uji-handle4:
INVESTIGACIONThis resource is restricted
http:\\dx.doi.org/10.1093/icc/dtv022 |
Metadata
Title
Gibrat's Law Redux: think profitability instead of growthDate
2015Publisher
Oxford University Press (OUP)Bibliographic citation
MUNDT, Philipp; ALFARANO, Simone; MILAKOVIĆ, Mishael. Gibrat’s Law Redux: think profitability instead of growth. Industrial and Corporate Change, 2015, p. dtv022.Type
info:eu-repo/semantics/articlePublisher version
http://icc.oxfordjournals.org/content/early/2015/05/15/icc.dtv022.shortAbstract
We argue that firm profitability can be conveniently characterized by one and the same diffusion process for all firms, akin to Gibrat’s seminal idea of a common stochastic description for the dynamics of firm growth. ... [+]
We argue that firm profitability can be conveniently characterized by one and the same diffusion process for all firms, akin to Gibrat’s seminal idea of a common stochastic description for the dynamics of firm growth. Here we show that the diffusion of profit rates applies across all surviving corporations, irrespective of their size or industry, which is not true for growth rates. The diffusion process is empirically consistent with both the cross-sectional distribution of profit rates and the individual time series of corporate profit rates, leading to the notion of a statistical equilibrium. This has stark and unexpected implications for our understanding of individual destinies, since the model and data suggest that idiosyncratic efforts have no impact on the aggregate distributional outcome. Instead, idiosyncratic efforts merely affect the individual persistence of abnormal profits from the system-wide norm. Put differently, corporations have to participate in the same game and can merely choose the speed at which they play it, but they cannot bend the rules. [-]
Is part of
Industrial and Corporate Change, 2015Rights
http://rightsstatements.org/vocab/CNE/1.0/
info:eu-repo/semantics/restrictedAccess
info:eu-repo/semantics/restrictedAccess
This item appears in the folowing collection(s)
- ECO_Articles [696]