Size effect and growth options over firm lifecycle

‘growth Options and the Value-size Puzzle’*

This study presents an intuitive explanation, based on insights of real options theory, for the value size puzzle. Growth firms are not overvalued, but priced for their upward potential. Small growth firms are especially characterized by an asymmetric risk-return relation. Therefore, the value-size premium comprises two parts: a distress premium and a growth discount. Beta underestimates the ri...

Does Firm Size Matter for Growth and Poverty Alleviation?

Panel unit root tests of firm size and its growth

This paper investigates Gibrat’s law by using a panel unit root test, as a panel unit root can increase power in contrast to a conventional individual ADF test. At first this paper uses the panel unit root test to testify Gibrat’s law under independent and identical distribution, with the test results rejecting the null hypothesis of Gibrat’s law. Independent and identical distributions are not...

Mandatory costs by firm size thresholds: firm location, growth and death in Sri Lanka

Sri Lanka’s Termination of Employment of Workmen Act (TEWA) requires that firms with 15 or more workers justify layoffs and provide generous severance pay to displaced workers, with smaller firms being exempted. Although formally subject to TEWA, firms in Export Promotion Zones (EPZs) do not face the same constraints as nonEPZ firms due to size incentives and lax labor law enforcement in that s...

Unpublished appendices from The Relationship between Firm Size and Firm Growth in the U.S. Manufacturing Sector

In this paper I present evidence that sample selection or attrition introduces very little bias into growth rate equations over time periods of approximately five to ten years. In this appendix I present the results of a time series analysis of three sets of firms (those in the sample from 1972 to 1979, from 1976 to 1983, and the combined sample from 1972 to 1983) with some confidence that thes...