The devil dwells in the tails

The paper “The devil dwells in the tails” by Toke Reichstein, Michael Dahl, Bernd Ebersberger and Morten Jensen  is now published in the Journal of Evolutionary Economics.

This paper explores firm growth rate distribution in a Gibrat’s Law context. It is novel in two respects. First, rather than limiting the analysis to a focus on the conditional mean, we investigate the entire shape of the distribution. Second, we show that differences in the firm growth rate process between large and small firms are highly circumstantial and depend on the industry dynamics. The data used include more than 9,000 Danish manufacturing, services and construction firms. We provide robust evidence indicating that firm growth studies should concentrate less on explaining means and instead focus on other parts of the firm growth rate distribution.

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