We want to know the distribution of companies.
Assumption: The distribution is lognormally distributed with constant average.
It can be described with the average
Bad Solution 1
Say we have a random sample.
The real average is the Orbis average
That's obviously not true
What's going on
Rich countries -> Larger companies -> Increase Orbis average
Rich countries -> Better quality -> Decrease Orbis average
Real average ∝ GDP/(number of Firms)
Estimate real average using intrinsic factors.
EXTRAPOLATE TO other countries.
Estimated real average
We can check theIR relationship based on completeness
If we assume Orbis starts adding the largest company, then the second largest...
We get that the relationship between the real average and the Orbis average depends linearly on the completeness (on log-log scale).
And it's nice when theory agrees.
How data is added
board size by revenue
By Javier GB