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On the Increasing Inequality in Size Distribution of China’s Listed Companies

Time:2014-12-12 Clicks:

On the Increasing Inequality in Size Distribution of China’s Listed Companies 

presented by professor Hongyi Li, Chinese University of Hongkong  

 

Abstract

This paper studies the temporal evolution of the size distribution of China’s listed companies. We first identify a Pareto distribution for the upper-tail distribution. Unexpectedly, we observe that the Pareto coefficients decrease monotonically over the years from 2001 to 2011. A decreasing Pareto coefficient implies that the firm size inequality of these China’s listed companies continuously increased in these years. This observation is unexpected because it has not been reported in the literature. By analyzing the relationship between the growth and size of firms, we find that one of the reasons causing the Pareto coefficients to decrease is that large firms grow faster than small ones. In addition, we examine newly listed companies and discover that newly listed companies with size greater than the lower bound of Pareto distribution also contributed to the decrease of the Pareto coefficients.