arbiter
JournalsAccount

The tails of firm growth, granularity, and business cycles

Carlos Daniel Santos

International Journal of Industrial Organization2026https://doi.org/10.1016/j.ijindorg.2026.103258article
AJG 3ABDC A*
Weight
0.50

Abstract

• The kurtosis of firm growth rates increases with firm size • This indicates that even large firms are subject to concentrated risks. • A model of customer concentration shows how aggregate fluctuations are driven by a combination of granularity and concentration. • Shocks are amplified only if the largest firms also have high levels of customer concentration. We document that the kurtosis of firm growth rates increases with firm size, indicating that even the largest firms are susceptible to significant, concentrated risks. To account for these cross-sectional characteristics, we develop a model where aggregate fluctuations are driven by customer concentration. We show that shocks are amplified only when large firms also have highly concentrated customer bases. This mechanism accounts for two stylized facts: the higher volatility of small firms and the heavier-tailed growth distributions of large firms. Customer concentration limits diversification and increases tail risks. Our findings suggest that understanding macroeconomic risk requires considering not just firm size, but also the concentration of their sales.

Open via your library →

Cite this paper

https://doi.org/https://doi.org/10.1016/j.ijindorg.2026.103258

Or copy a formatted citation

@article{carlos2026,
  title        = {{The tails of firm growth, granularity, and business cycles}},
  author       = {Carlos Daniel Santos},
  journal      = {International Journal of Industrial Organization},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1016/j.ijindorg.2026.103258},
}

Paste directly into BibTeX, Zotero, or your reference manager.

Flag this paper

The tails of firm growth, granularity, and business cycles

Flags are reviewed by the Arbiter methodology team within 5 business days.

Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.