Does Gibrat's Law hold among young,small firms?

According to Gibrat's Law of Proportionate Effect, the growth rate of a given firm is independent of its size at the beginning of the examined period. Aimed at extending this line of investigation, the present paper uses quantile regression techniques to test whether Gibrat's Law holds for new entrants in a given industry: that is for new small firms in the early stage of their life cycle. The main finding is that for some selected industries in Italian manufacturing Gibrat's Law fails to hold in the years immediately following start-up, when smaller firms have to rush in order to achieve a size large enough to enhance their likelihood of survival. Conversely, in subsequent years the patterns of growth of new smaller firms do not differ significantly from those of larger entrants, and the Law therefore cannot be rejected.JEL Classification: L11, L60Previous versions of this paper were presented at the 27th Annual EARIE Conference (Lausanne, 7-10 September 2000) and at seminars held between 2000 and 2003 at the Economics Department of Harvard University, the Catholic University of Milan, the University of Ferrara, the University of Bologna, the Bank of Italy, and Athens University of Economics & Business. We would like to thank Carlo Bianchi, Giuseppe Colangelo, Giovanni Dosi, Steven Klepper (Editor), Stephen Martin, Ariel Pakes, Aman Ullah and, in particular, Helen Louri and two anonymous referees for their valuable comments on earlier drafts. Financial support from MIUR (Year 2000; protocol #MM13038538_001; project leader: E. Santarelli) is gratefully acknowledged.Correspondence to: E. Santarelly     

Integer programming on domains containing inseparable ordered pairs

Using the integer programming approach introduced by Sethuraman et al. (2003), we extend the analysis of the preference domains containing an inseparable ordered pair, initiated by Kalai and Ritz (1978). We show that these domains admit not only Arrovian social welfare functions “without ties,” but also Arrovian social welfare functions “with ties,” since they satisfy the strictly decomposability condition introduced by Busetto et al. (2015). Moreover, we go further in the comparison between Kalai and Ritz (1978)’s inseparability and Arrow (1963)’s single-peak restrictions, showing that the former condition is more “respectable,” in the sense of Muller and Satterthwaite (1985).     

Partial identification of probability distributions with misclassified data

This paper addresses the problem of data errors in discrete variables. When data errors occur, the observed variable is a misclassified version of the variable of interest, whose distribution is not identified. Inferential problems caused by data errors have been conceptualized through convolution and mixture models. This paper introduces the direct misclassification approach. The approach is based on the observation that in the presence of classification errors, the relation between the distribution of the ‘true’ but unobservable variable and its misclassified representation is given by a linear system of simultaneous equations, in which the coefficient matrix is the matrix of misclassification probabilities. Formalizing the problem in these terms allows one to incorporate any prior information into the analysis through sets of restrictions on the matrix of misclassification probabilities. Such information can have strong identifying power. The direct misclassification approach fully exploits it to derive identification regions for any real functional of the distribution of interest. A method for estimating the identification regions and construct their confidence sets is given, and illustrated with an empirical analysis of the distribution of pension plan types using data from the Health and Retirement Study.     

Board diversity reforms: Do they matter for EU bank performance?

We examine the impact of governance reforms related to board diversity on the performance of European Union banks. Using a difference‐in‐difference approach, we document that reforms increase bank stock returns and their volatility within the first 3 years after their enactment. The type of reform matters, with quotas increasing return volatility. The effectiveness of reforms depends on a country's institutional environment. The impact of reforms on return volatility is found to be beneficial in countries more open to diversity, with common law system and with greater economic freedom. Finally, reforms play a bigger role in banks that have ex ante less heterogeneous boards.