Is firm growth random? A machine learning perspective

This study contributes to the firm growth debate by applying machine learning. We compare a prominent machine learning technique – random forest analysis (RFA) – to traditional regression in terms of their goodness-of-fit on a dataset of 168,055 firms from Belgium and the Netherlands. For each of these firms, we have one to six years of historical data involving demographic and financial information. The data show high variation in firm growth...