The development of firm size distribution – Evidence from four Central European countries

Abstract

We have studied firm size distribution in selected Central European countries – known as The Visegrad Four (Czech Republic, Hungary, Poland, and Slovakia) – using total assets, equity and revenues, as size criteria. The aim of the article was to identify level of corporate disparity and its midterm development in 2017–2019. Using distribution analysis on a sample of 111,460 firms, we have found that log-normal distribution is more or equally suitable as power-law for particular countries, depending on size criterion. Moreover, in majority of cases, log-normal includes smaller firms into computation. While Hungarian firms recorded the highest intergroup disparity, distribution of Czech and Polish firms show higher intergroup equality, thus also a better level of competition. The midterm development, e.g., shows certain convergence of Czech Republic and Poland, as well as partial reduction of disparity for Hungary. Gibrat's Law is only confirmed partially for growth of revenues. The other size criteria do not apply, since smaller firms have grown faster than larger ones. In general, our results are not unequivocally robust against the used size criterion.