Inequality in Firm Performance Distribution

Abstract

Why do the distributions of firm performance differ across countries and periods of time? Using publicly available data on listed companies from more than 60 countries between 2000 and 2015, we present a framework to demonstrate how inequality in firm performance distributions (firm inequality) takes shape. In this framework, changes in the shape of performance distributions are contingent on the country-period context. We report four patterns of performance distribution during regular economic periods and one pattern for economic recessions. Economic development is generally found to be associated with an increase in firm inequality and a convergence in firm inequalities across countries. Based on these empirical findings, we discuss the theoretical implications of performance distributions’ context-specificity for future studies.

Keywords: performance distribution, firm inequality, cross-country comparison, economic growth