Facts of US Firm Scale and Growth 1970-2019: An Illustrated Guide

Paper: arXiv 2302.02485

Authors: Robert Parham

Abstract

This work analyzes data on all public US firms in the 50 year period 1970-2019, and presents 18 stylized facts of their scale, income, growth, return, investment, and dynamism. Special attention is given to (i) identifying distributional forms; and (ii) scale effects – systematic difference between firms based on their scale of operations. Notable findings are that the Difference-of-Log-Normals (DLN) distribution has a central role in describing firm data, scale-dependent heteroskedasticity is rampant, and small firms are systematically different from large firms.

Complexity vs Empirical Score

• Math Complexity: 4.5/10
• Empirical Rigor: 8.5/10
• Quadrant: Street Traders — practical and empirical, lighter on theory

Why this score: This paper provides a comprehensive, empirical examination of 50 years of US public firm data, establishing key stylized facts such as scale-dependent heteroskedasticity and the role of the Difference-of-Log-Normals distribution. While mathematically accessible rather than proof-heavy, its empirical rigor, large sample scope, and clear presentation make it a highly useful descriptive reference.

Research Flowchart

  flowchart TD
    A[Research Goal: Analyze US Public Firm Scale, Growth & Dynamism 1970–2019] --> B[(Data Input: 50 Years of US Public Firm Financial Data)]
    B --> C[Methodology: Distributional Fitting & Scale-Effect Analysis]
    C --> D[Computational Analysis: Evaluate Scale, Income, Growth, Investment & Dynamism]
    D --> E[Key Finding 1: 18 Stylized Facts of US Firm Scale & Growth]
    D --> F[Key Finding 2: Difference-of-Log-Normals DLN Distribution Prevails]
    D --> G[Key Finding 3: Rampant Scale-Dependent Heteroskedasticity]