| This study revisits the relationship between the size and the growth rate of firms. Although the existing literature focuses on the mean and the variance of the growth rate; the distribution of the growth rate is richer in its characteristics, exhibiting positive skewness and excess kurtosis. While both mean and median growth rate negatively relates to the size, the slope of the median is much flatter than that of the mean. The variance, the skewness, and the kurtosis of the growth rate are all smaller for larger firms, except for very small firms. The skewness and kurtosis of growth rate relative to that of q reveal the nature of the adjustment costs of capital. Based on q theory, it is shown that (1) the skewness indicates asymmetry in the marginal cost and (2) the kurtosis indicates fixed costs of investment. Further; the skewness of the growth rate helps to infer the degree of financial development in economy. |
