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Firm Size Distribution and the Survival Bias

Author

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  • Antonio Palestrini

    (Università Politecnica delle Marche, Italy)

Abstract

In this work, using the simple Kesten's process, I investigate the survival bias of the firm size distribution selecting a cohort of surviving firms. This work shows that the modified Kesten's process - in which firms exit when their size (measured as equity) cross the barrier (go bankrupt) - produces a limit distribution of the cohort more symmetric. This result provides a benchmark at comparing the distribution produced by economic models studying surviving firms.

Suggested Citation

  • Antonio Palestrini, 2015. "Firm Size Distribution and the Survival Bias," Economics Bulletin, AccessEcon, vol. 35(3), pages 1630-1637.
    • Handle: RePEc:ebl:ecbull:eb-14-00576
    as

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    References listed on IDEAS

    as
    1. Evans, David S, 1987. "The Relationship between Firm Growth, Size, and Age: Estimates for 100 Manufacturing Industries," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 567-581, June.
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    Cited by:

    1. Delmar, Frédéric & Wallin, Jonas & Nofal, Ahmed Maged, 2022. "Modeling new-firm growth and survival with panel data using event magnitude regression," Journal of Business Venturing, Elsevier, vol. 37(5).

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    More about this item

    Keywords

    Firms' size distribution; multiplicative processes; survival bias.;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • D3 - Microeconomics - - Distribution

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