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Concluding Gibrat’s law with Turkish firm data

Author

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  • Aydogan, Yigit
  • Donduran, Murat

Abstract

In this study, the validity of the Gibrat’s Law, i.e. the Law of the Proportionate Effect, is tested using a balanced panel of nearly one million firms in Turkey between 2005–2016. A random parameters model is considered to make use of the heterogeneity of individual firms. Unlike the somehow weak results of the rejecting studies from the literature, Gibrat’s Law is strongly rejected with the random slope and random intercept model utilizing a complete dataset. Employing the distributional properties of firms and modified Gibrat’s Law, which is being used to justify the recent revival of the Law in the literature, did not alter the result.

Suggested Citation

  • Aydogan, Yigit & Donduran, Murat, 2019. "Concluding Gibrat’s law with Turkish firm data," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 533(C).
    • Handle: RePEc:eee:phsmap:v:533:y:2019:i:c:s0378437119311896
    DOI: 10.1016/j.physa.2019.122066
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    Citations

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    Cited by:

    1. Aktaev, Nurken E. & Bannova, K.A., 2022. "Mathematical modeling of probability distribution of money by means of potential formation," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 595(C).
    2. Tomaschitz, Roman, 2020. "Multiply broken power-law densities as survival functions: An alternative to Pareto and lognormal fits," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 541(C).
    3. Kahsay Gerezihar Tsaedu & Zhihong Chen, 2021. "The Dynamics of Firm Growth in Sub-Saharan Africa: Evidence from Ethiopian Manufacturing Sector 1996–2017," Journal of Industry, Competition and Trade, Springer, vol. 21(3), pages 367-392, September.
    4. Bentzen Jan & Tung Le Thanh, 2023. "Does firm size improve firm growth? Empirical evidence from an emerging economy," Economics and Business Review, Sciendo, vol. 9(3), pages 9-21, October.
    5. Domínguez Jurado, José Miguel & Triguero-Ruiz, Francisco & Avila-Cano, Antonio, 2021. "Firm growth in the 21st century: Does the Andalusian economy comply with Gibrat’s Law?," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 577(C).

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