NDLI: Do firms’ growth rates depend on firm size?

Content Provider	Springer Nature Link
Author	Bentzen, Jan Madsen, Erik Strøjer Smith, Valdemar
Copyright Year	2011
Abstract	The empirical literature dealing with corporate growth does not in general give support to Gibrat’s Law stating that the expected increase in firm size is proportionate to its initial size, leaving their growth rates independent of size. Using a relatively large and representative sample of approximately 2,500 Danish firms representing all industries, we have evaluated the validity of Gibrat’s Law over the period 1990–2004. The present analysis addresses this question by applying econometric methods to test Gibrat’s Law and correcting for problems related to autocorrelation. The empirical findings of our study do not generally support Gibrat’s Law, but in contrast to the results of earlier studies, the analysis reveals that firms’ growth rates are more likely to be positively related to firm size.
Starting Page	937
Ending Page	947
Page Count	11
File Format	PDF
ISSN	0921898X
Journal	Small Business Economics
Volume Number	39
Issue Number	4
e-ISSN	15730913
Language	English
Publisher	Springer US
Publisher Date	2011-06-03
Publisher Place	Boston
Access Restriction	One Nation One Subscription (ONOS)
Subject Keyword	Gibrat’s Law Firm size and growth Panel data Non-linear regressions Microeconomics Industrial Organization Entrepreneurship Management/Business for Professionals
Content Type	Text
Resource Type	Article
Subject	Economics and Econometrics Business, Management and Accounting

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Do firms’ growth rates depend on firm size?