Gibrat’s law and persistence of growth in Greek manufacturing

Gibrat’s law and persistence of growth in Greek manufacturing This study makes use of a sample of Greek manufacturing firms during 1995–2001 in order to analyze Gibrat’s law. We find Gibrat’s law is rejected for the total sample of firms, since persistence of growth plays a key role. The classification of firms in size and age groups, however, yields more interesting results: Gibrat’s law is rejected for micro, small, and young firms, since an inverse relationship between firm growth and initial firm size is found along with a persistence of growth rates in subsequent periods. In contrast, Gibrat’s law is accepted for medium, large, and old firms, implying that the growth patterns of these categories follow a random walk and do not tend to persist in subsequent periods. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Small Business Economics Springer Journals

Gibrat’s law and persistence of growth in Greek manufacturing

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Publisher
Springer US
Copyright
Copyright © 2008 by Springer Science+Business Media, LLC.
Subject
Business and Management; Management; Microeconomics; Entrepreneurship; Industrial Organization
ISSN
0921-898X
eISSN
1573-0913
D.O.I.
10.1007/s11187-008-9163-5
Publisher site
See Article on Publisher Site

Abstract

This study makes use of a sample of Greek manufacturing firms during 1995–2001 in order to analyze Gibrat’s law. We find Gibrat’s law is rejected for the total sample of firms, since persistence of growth plays a key role. The classification of firms in size and age groups, however, yields more interesting results: Gibrat’s law is rejected for micro, small, and young firms, since an inverse relationship between firm growth and initial firm size is found along with a persistence of growth rates in subsequent periods. In contrast, Gibrat’s law is accepted for medium, large, and old firms, implying that the growth patterns of these categories follow a random walk and do not tend to persist in subsequent periods.

Journal

Small Business EconomicsSpringer Journals

Published: Dec 11, 2008

References

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