INFOGRAPHIC: Turnover at the Top

COMPANIES fall out of the Top 1000 list all the time, and for all sorts of reasons. It could be that revenue didn’t make the cut, either because of an outright decline or because even a growing company could not keep up with its more aggressive peers. Sometimes a company gets merged out of existence. And then there are the more prosaic reasons, like failure to file the sort of financial statements that BusinessWorld relies on to compile its annual list.

Absence from the Top 1000 is therefore no guarantee then that the missing companies are permanently out of it. Decline and disruption in themselves are complex phenomena that point to many other things going on within an economy. And yet it is hard to avoid the perception that any Top 1000 member that leaves the club is very likely giving up its place to a newcomer which is leaner, meaner and more prepared to compete in the global economy.

The constant renewal of the Top 1000 can thus be viewed as a positive thing, marking the rise of the sort of aggressive new upstart better adapted to the new environment. And rates of renewal can be measured, giving us an insight into which sort of disruptive events herald the rise of the new while sweeping out the old. 

Let’s go to the data: between 1999 and 2013, 186 companies on average left the Top 1000 every year. That’s nearly a fifth of the population being stricken off the list every year. But two years in particular stand out.

The record for churn in the Top 1000 is 226 companies, set in 1999, two years after the Asian financial crisis exposed the weakness of the region’s economies, very likely accelerating the decline of many companies that had thrived in pre-crisis conditions.

The low, meanwhile, was set in 2011 when only 159 companies left the scene, just as the new Philippine government was starting to implement reforms that have since produced some of the highest growth rates in Asia. The stability provided by the new regime quite possibly allowed many of the better-run companies to optimize their operations for the new high-growth reality.

Whatever the reason behind their rise and fall, there is a certain satisfaction in being able to identify a group of companies that represent the pinnacle of the Philippine corporate scene. BusinessWorld curates its list with great care, going to great lengths to validate the numbers and pursue even to the last minute the financial statements of those companies that neglect to met their filing deadlines. The result is a club one thousand strong, where being a member is generally viewed to be far better than being on the outs. 

BusinessWorld releases its latest edition of the Top 1000 Corporations in the Philippines on Nov. 28. -- Virgil S. Villanueva