Growth, Acquisition Activity and Firm Size: Evidence from the United Kingdom

THIS PAPER provides new empirical evidence on the relationship between size, growth and acquisition activity of quoted companies in the United Kingdom. The evidence is based on some two thousand companies and covers the period I960-76. There has been no detailed systematic study for this period. The results suggest some revisions to generally accepted views in the area and they have certain implications for industrial and competition policy pursued in the U.K. and the factors affecting aggregate concentration. The paper is arranged as follows: Section I considers the broader economic context for the study whilst Section II notes some a priori expectations regarding the relationship between size and growth, and size and acquisition activity. Sections III-V present empirical evidence and the last section provides a summary and policy implications of the results.