Do liquidity constraints matter in explaining firm size and growth? Some evidence from the Italian manufacturing industry

Arbeitspapier

The paper investigates whether liquidity constraints affect firm size and growth dynamics using a large longitudinal sample of Italian manufacturing firms. We run standard panel-data Gibrat regressions, suitably expanded to take into account liquidity constraints (proxied by cash flow scaled by firm sales). Moreover, we characterize the statistical properties of firms size, growth, age, and (scaled) cash flow distributions. Pooled data show that: (i) liquidity constraints engender a negative, statistically significant, effect on growth once one controls for size; (ii) smaller firms grow more (and experience more volatile growth patterns) after controlling for liquidity constraints; (iii) the stronger liquidity constraints, the more size negatively affects firm growth. We find that pooled size distributions depart from log-normality and growth rates are well approximated by fat-tailed, tent-shaped (Laplace) densities. We also study the evolution of growth-size distributions over time. Our exercises suggest that the strong negative impact of liquidity constraints on firm growth which was present in the pooled sample becomes ambiguous when one disaggregates across years. Finally, firms who were young and strongly liquidity-constrained at the beginning of the sample period grew persistently more than those who were old and weakly liquidity-constrained.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: LEM Working Paper Series ; No. 2004/08

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Production, Pricing, and Market Structure; Size Distribution of Firms ; Corporate Finance and Governance: General ; Firm Behavior: Theory
• Thema: Firm Size ; Liquidity Constraints ; Firm Growth ; Investment ; Gibrat Law ; Liquiditätsbeschränkung ; Betriebsgröße ; Unternehmenswachstum ; Investition ; Industrie ; Italien

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Fagiolo, Giorgio ; Luzzi, Alessandra
• Ereignis: Veröffentlichung
• (wer): Scuola Superiore Sant'Anna, Laboratory of Economics and Management (LEM)
• (wo): Pisa
• (wann): 2004

Weitere Informationen

• Handle: http://hdl.handle.net/10419/89343
• Letzte Aktualisierung: 10.03.2025, 11:45 MEZ