Scandinavian Working Papers in Economics
Ratio Working Papers,
The Ratio Institute
No 164: Does Gibrat’s Law Hold for Retailing? Evidence from Sweden
Sven-Olov Daunfeldt (), Niklas Elert () and Åsa Lang
Additional contact information
Sven-Olov Daunfeldt: The Ratio Institute and Dalarna University, Postal: The Ratio Institute, P.O. Box 3203, SE-103 64 Stockholm, Sweden
Niklas Elert: The Ratio Institute and Dalarna University, Postal: The Ratio Institute, P.O. Box 3203, SE-103 64 Stockholm, Sweden
Åsa Lang: Dalarna University and Mid Sweden University, Postal: Department of Business Administration , School of Technology and Business Studies , Dalarna University , SE-791 88 Borlänge , Sweden
Abstract: Gibrat’s Law predicts that firm growth is a purely random effect and therefore should be independent of firm size. The purpose of this paper is to test Gibrat’s law within the retail industry, using a novel data-set comprising all Swedish limited liability companies active at some point between 1998 and 2004. Very few studies have previously investigated whether Gibrat’s Law seems to hold for retailing, and they are based on highly aggregated data. Our results indicate that Gibrat´s Law can be rejected for a large majority of five-digit retail industries in Sweden, since small retail firms tend to grow faster than large ones.
Keywords: firm dynamics; firm size; firm growth; retail
33 pages, March 8, 2011
Full text files
sod_ne_al_gibrats_wp_164.pdf
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