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Firm Growth and Scaling of Growth Rate Variance in Multiplant Firms

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  • Alex Coad

    ()
    (Max Planck Institute of Economics, Jena, Germany; Centre d'Economie de la Sorbonne, Equipe MATISSE, Univ. Paris 1 - CNRS)

Abstract

While Gibrat's Law assumes that growth rate variance is independent of size, empirical work has usually found a negative relationship between growth rate variance and ï¬rm growth. Using data on French manufacturing ï¬rms, we observe a relatively low, but statistically signiï¬cant, negative relationship between ï¬rm size and growth rate variance. Furthermore, we observe that growth rate variance does not decrease monotonically the more plants a ï¬rm possesses, which is at odds with a number of theoretical models.

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Bibliographic Info

Paper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2007-101.

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Date of creation: 18 Dec 2007
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Handle: RePEc:jrp:jrpwrp:2007-101

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Keywords: Growth rate variance; Firm growth; Scaling relationship; Multiplant ï¬rms; Gibrat's Law;

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