Corporate finance and governance in firms with limited liability: Basic characteristics

Abstract

We analyze a wide range of corporate finance and governance characteristics in all active Norwegian firms with limited liability over the period 1994-2005. This sample includes about 77,000 nonlisted (private) firms and 135 listed (public) firms per year. Nonlisted firms have barely been addressed in the finance literature, despite our finding that they employ four times more people than listed firms, have about four times higher revenues, hold twice as much assets, and constitute over 99% of the enterprises. Indirect evidence suggests that this is also the typical situation worldwide. The unexplored nature of nonlisted firms makes us address a large set of characteristics, and to focus more on describing overall patterns in the data rather than making elaborate tests of behavioral hypotheses. We find that the size distribution of firms in the economy is close to lognormal, which is consistent with independence between size and growth for the individual firm.