Growth volatility and size: A firm-level study

Flavio Calvino (1) , Chiara Criscuolo (2, 1) , Carlo Menon (1, 2) , Angelo Secchi (3, 4)

1 OCDE - Organisation de Coopération et de Développement Economiques = Organisation for Economic Co-operation and Development
2 LSE - London School of Economics and Political Science
3 PSE - Paris School of Economics
4 PJSE - Paris Jourdan Sciences Economiques

This paper provides a systematic cross-country investigation of the relation between a firm’s growth volatility and its size. For the first time the analysis is carried out using comparable and representative sets of data sourced by official business registers of an important number of countries. We show that there exists a robust negative relation between growth volatility and size with an average elasticity equal to . We check the robustness of this result against a number of potential sources of bias and in particular with respect to sectoral disaggregation and against the inclusion of firm age. Our result is consistent with the idea that independently from specific country characteristics there exists a common underlying mechanism driving the elasticity between size and growth volatility. We then propose two mechanisms able to explain our result and we conclude discussing its relevance with respect to the recent literature on granularity.

Mots clés: Firm size; Gibrat’s law; Volatility of growth

Domaines: Economies et finances

Flavio Calvino, Chiara Criscuolo, Carlo Menon, Angelo Secchi. Growth volatility and size: A firm-level study. Journal of Economic Dynamics and Control, 2018, 90, pp.390 - 407. ⟨10.1016/j.jedc.2018.04.001⟩. ⟨halshs-01802871⟩