Evidence of a Threshold Size for Norwegian Campsites and Its Dynamic Growth Process Implications—Does Gibrat’s Law Hold?

Valenta, Robin; Idsø, Johannes; Opstad, Leiv

doi:10.3390/economies9040175

Cited by 4 publications

(9 citation statements)

References 38 publications

(57 reference statements)

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“…When the parameter of interest is expected to approach unity, the system GMM estimator developed by Blundell and Bond is best suited Blundell and Bond (1998), although it assumes that the variables have reached a steady state (which is rarely the case for all firms in a sector). Valenta et al describe and use the different estimators that are relevant for dynamic panel data estimation Valenta et al (2021).…”

Section: Methodology and Datamentioning

confidence: 99%

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The Dynamics of the Profitability and Growth of Restaurants; The Case of Norway

2022

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The restaurant industry is quite similar across borders. It is a labour-intensive industry that is important for tourism and employment. It consists mainly of many small businesses that are regionally dispersed. There are many studies that have analysed this sector. However, rather few articles have focused on the dynamics of growth and profit. The purpose of this paper is to apply the theory of profit persistence and the law of proportionate effect (LPE) to Norwegian restaurants by using publicly available public panel data from 2010 to 2019. The sample includes 866 restaurants. One important finding is that Gibrat’s law (LPE) does not seem to hold, meaning the growth is not independent of the size of the firms. Small businesses grow faster than the others, and they are also more profitable. There is some degree of profit persistence in the restaurant industry. Profitability is negatively linked to debt ratios but positively related to working capital. The study shows there is a trade-off between size and profit. These findings are useful for the industry and for others (public planning, lenders, and more).

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Section: Methodology and Datamentioning

confidence: 99%

“…The firms take advantage of scale economics until they reach the minimum efficient scale (MES). For Norwegian campsites, the simple version of Gibrat's law was rejected, but the extended version was only partly rejected Valenta et al (2021).…”

Section: Law Of Proportionate Effect (Lpe)mentioning

confidence: 99%

The Dynamics of the Profitability and Growth of Restaurants; The Case of Norway

2022

Self Cite

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“…The empirical work is based on Gibrat's Law [22]. This gives useful additional information for the analysis of enterprises and the profit level [32,33]. The model of LPE is:…”

Section: Law Of Proportionate Effect (Lpe)mentioning

confidence: 99%

“…A positive ρ points to a sector with inertia, while ρ = 0 means that firms that are off trend revert to trend within a year. That is, if there is no significant moving average component in firm trends, all shocks to size or growth are absorbed within a year and there are no spillover effects [33].…”

Section: Law Of Proportionate Effect (Lpe)mentioning

confidence: 99%

The Dynamics of Profitability among Salmon Farmers—A Highly Volatile and Highly Profitable Sector

Opstad

Idsø

Valenta

2022

Fishes

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Salmon farming stands out from many other industries with its very high profitability, but it is also highly volatile. The main question is whether the profit of individual firms is stable, or whether profitable firms change from year to year. The purpose of this article is to apply the theory of profit persistence to answer this question for salmon farming in Norway. By using panel data from 2010 to 2019, available from public statistics, we study the relative deviation from the average profits. We estimate the speed of adjustment to the profit norm by using a dynamic GMM estimator. We find a high degree of convergence to the average profit among salmon farmers. For companies belonging to the group with below-average profit, there is a positive correlation between growth and profitability and a negative link between debt ratio and deviation of profit rate. Our finding is that although the Norwegian aquaculture industry has large profits, there is large volatility in the profits of this industry. This is useful knowledge for investors, lenders, public authorities and others who need to know something about the risk in the aquaculture industry.

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“…The error term εit will have feedback bias if we estimate the equation with Ordinary Least Squares (OLS) which is why we use the system-GMM estimator developed by Arelleno and Bover (1995) and Blundell and Bond (1998). It is explained further by Valenta, Idsø and Opstad (2021).…”

Section: Profit Persistency (Pop)mentioning

confidence: 99%

Non-Linear Economies of Scale in Food Production: The Case of Norwegian Bakeries

Opstad¹,

Valenta²

2022

IJAEFA

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The bakery industry has a rich history. Its modern forms involve both manufacturing products and delivering them to customers. Both small bakers and large producers sell their products to the supermarket. The largest bakeries export a wide variety of baked foods. The sector is a large employer and it has been thoroughly studied internationally. However, only a small number of studies have analysed the baked goods sector, often due to the lack of categorization of bakeries in the data. In this article, we use public statistics on Norwegian bakeries to study their economies of scale. The profitability of large bakeries persistently exceeds the average rate. New bakeries are equally likely to succeed or fail in the long run. Many new bakeries enter the market as a result of tough competition and a long period of high sector probability but it is difficult for them to survive. Those that must leave the market are mostly new entrants. Despite their difficulties, small and medium-sized bakeries are more profitable than new start-up businesses. We investigate the non-linear relationship between size and profitability as well as between and within bakeries.

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Evidence of a Threshold Size for Norwegian Campsites and Its Dynamic Growth Process Implications—Does Gibrat’s Law Hold?

Cited by 4 publications

References 38 publications

The Dynamics of the Profitability and Growth of Restaurants; The Case of Norway

The Dynamics of the Profitability and Growth of Restaurants; The Case of Norway

The Dynamics of Profitability among Salmon Farmers—A Highly Volatile and Highly Profitable Sector

Non-Linear Economies of Scale in Food Production: The Case of Norwegian Bakeries

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