Bentzen, Jan () (Department of Economics, Aarhus School of Business) Madsen, Erik Strøjer () (Department of Economics, Aarhus School of Business) Smith, Valdemar () (Department of Economics, Aarhus School of Business)
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The extensive empirical literature on the validity of Gibrat’s law does not in general verify the law as it finds that firms’ growth rates are negatively correlated with both firm size and age. However, some studies find that Gibrat’s law holds for sub-samples of firms such as large firms or firms belonging to special industries. It has been pointed out that these results are due to the fact that the likelihood of firm survival for natural reasons is positively related to firm size and age. This study uses a relatively large and representative sample of Danish firms to evaluate the validity of Gibrat’s law for different kinds of firms over the period 1990 - 2003. In contrast to the majority of earlier studies our analysis corrects for the bias in the estimations by using variables related to the survival of small firms.
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Paper provided by University of Aarhus, Aarhus School of Business, Department of Economics in its series Working Papers with number
06-3.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Audretsch, D.B. & Klomp, L. & Thurik, A.R., 2002.
"Gibrat's Law: are the services different?,"
Research Paper
ERS-2002-04-STR Revision_, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni.
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