Volatility and Firm Growth: Do Firm Size and Age Matter?

Abstract

The impact of different types of volatility on the growth of Pakistani-listed non-financial firms is examined by using annual unbalanced panel data over the period 1988–2017. The differential effects of volatility conditional on firm size and age are also explored. The results indicate that the influence of firm volatility on firm growth is positive for small firms and negative for medium, large, young, and mature firms. The impact of market volatility is positive (negative) for small, young, and mature (large) firms. Industrial volatility has a negative impact on mature firms’ growth, but the impact on young, small, medium, and large firms is positive. Finally, the results indicate that the impact of macroeconomic volatility is positive for small firms but negative for large, young, and mature firms.