Data and Code for: A Reputational Theory of Firm Dynamics

We study the lifecycle of a firm that produces a good of unknown quality. The firm manages its quality by investing, while consumers learn via public breakthroughs; if the firm fails to generate such breakthroughs, its revenue falls and it eventually exits. Optimal investment depends on the firm's reputation (the market's belief about its quality) and self-esteem (the firm's own belief about its quality), and is single-peaked in the time since a breakthrough. We derive predictions about the distribution of revenue, and propose a method to decompose the impact of policy changes into investment and selection effects.<br>