TY - JOUR
T1 - Like milk or wine
T2 - Does firm performance improve with age?
AU - Coad, Alex
AU - Segarra, Agustí
AU - Teruel, Mercedes
N1 - Funding Information:
We are grateful to Abdelillah Hamdouch, Albert Jolink, Frederic Lee, Marco Vivarelli, Sidonia von Proff, and participants at ENEF 2010 (Amsterdam), EAEPE 2010 (Bordeaux) and XV Encuentro de Economía Aplicada (La Coruña, Spain) for many helpful comments, as well as to Giulio Bottazzi and Angelo Secchi (guest editors) and two anonymous referees. Alex Coad gratefully acknowledges financial support from the ESRC, TSB, BIS and NESTA on grants ES/H008705/1 and ES/J008427/1 as part of the IRC distributed projects initiative, as well as from the AHRC as part of the FUSE project. Mercedes Teruel and Agusti Segarra gratefully acknowledge financial support of the Spanish Ministry of Innovation and Science in the project ECO2009-08735 and the Consolidated Group of Research 2009-SGR-907. Any remaining errors are ours alone.
PY - 2013/3
Y1 - 2013/3
N2 - Little is known about how firm performance changes with age, presumably because of the paucity of data on firm age. We analyze the performance of a panel of Spanish manufacturing firms between 1998 and 2006, relating it to firm age. We find evidence that firms improve with age, because ageing firms are observed to have steadily increasing levels of productivity, higher profits, larger size, lower debt ratios, and higher equity ratios. Furthermore, older firms are better able to convert sales growth into subsequent growth of profits and productivity. On the other hand, we also found evidence that firm performance deteriorates with age. Older firms have lower expected growth rates of sales, profits and productivity, they have lower profitability levels (when other variables such as size are controlled for), and also that they appear to be less capable to convert employment growth into growth of sales, profits and productivity.
AB - Little is known about how firm performance changes with age, presumably because of the paucity of data on firm age. We analyze the performance of a panel of Spanish manufacturing firms between 1998 and 2006, relating it to firm age. We find evidence that firms improve with age, because ageing firms are observed to have steadily increasing levels of productivity, higher profits, larger size, lower debt ratios, and higher equity ratios. Furthermore, older firms are better able to convert sales growth into subsequent growth of profits and productivity. On the other hand, we also found evidence that firm performance deteriorates with age. Older firms have lower expected growth rates of sales, profits and productivity, they have lower profitability levels (when other variables such as size are controlled for), and also that they appear to be less capable to convert employment growth into growth of sales, profits and productivity.
KW - Financial structure
KW - Firm age
KW - Firm growth
KW - LAD
KW - Vector auto regression
UR - http://www.scopus.com/inward/record.url?scp=84873252237&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84873252237&partnerID=8YFLogxK
U2 - 10.1016/j.strueco.2012.07.002
DO - 10.1016/j.strueco.2012.07.002
M3 - Article
AN - SCOPUS:84873252237
SN - 0954-349X
VL - 24
SP - 173
EP - 189
JO - Structural Change and Economic Dynamics
JF - Structural Change and Economic Dynamics
IS - 1
ER -