Article ID Journal Published Year Pages File Type
8954607 Journal of Monetary Economics 2018 47 Pages PDF
Abstract
Two modern economic trends are the increase in firm size and advances in information technology. We explore the hypothesis that big data disproportionately benefits big firms. Because they have more economic activity and a longer firm history, large firms have produced more data. As processor speed rises, abundant data attracts more financial analysis. Data analysis improves investors' forecasts and reduces equity uncertainty, reducing the firm's cost of capital. When investors can process more data, large firm investment costs fall by more, enabling large firms to grow larger.
Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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