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Firm size and firm growth rate distributions--The case of Denmark

Author

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  • Toke Reichstein
  • Morten Berg Jensen

Abstract

There has been a recent renewed interest in the study of firm size distributions and firm growth rate distributions. Gibrat's law assumes firm growth rates are independent and identically distributed and that size is determined by a first-order integrated process, leaving the size distribution log-normal. This article analyzes these distribution patterns in an empirical context, questioning the foundation of this model. In a cross-section analysis of four industries using Danish data, we show that the foundation and the outcome of Gibrat's law are empirically far-fetched. In particular, significant deviations from normality are found. Copyright 2005, Oxford University Press.

Suggested Citation

  • Toke Reichstein & Morten Berg Jensen, 2005. "Firm size and firm growth rate distributions--The case of Denmark," Industrial and Corporate Change, Oxford University Press, vol. 14(6), pages 1145-1166, December.
  • Handle: RePEc:oup:indcch:v:14:y:2005:i:6:p:1145-1166
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    References listed on IDEAS

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    1. repec:hal:journl:halshs-00331282 is not listed on IDEAS
    2. Thomas Brenner & Matthias Duschl, 2014. "Modelling Firm and Market Dynamics - A Flexible Model Reproducing Existing Stylized Facts," Working Papers on Innovation and Space 2014-07, Philipps University Marburg, Department of Geography.
    3. Nanditha Mathew, 2017. "Drivers of firm growth: micro-evidence from Indian manufacturing," Journal of Evolutionary Economics, Springer, pages 585-611.
    4. Segarra, Agustí & Teruel, Mercedes, 2012. "An appraisal of firm size distribution: Does sample size matter?," Journal of Economic Behavior & Organization, Elsevier, vol. 82(1), pages 314-328.
    5. Marco Capasso & Elena Cefis & Alessandro Sapio, 2013. "Reconciling quantile autoregressions of firm size and variance–size scaling," Small Business Economics, Springer, pages 609-632.
    6. Halvarsson, Daniel, 2013. "Identifying High-Growth Firms," Ratio Working Papers 215, The Ratio Institute.
    7. Omar Blanco Arroyo & Simone Alfarano, 2017. "Granularity of the Business Cycle Fluctuations: The Spanish Case," Economía Coyuntural,Revista de temas de perspectivas y coyuntura, Instituto de Investigaciones Económicas y Sociales 'José Ortiz Mercado' (IIES-JOM), Facultad de Ciencias Económicas, Administrativas y Financieras, Universidad Autónoma Gabriel René Moreno, pages 31-58.
    8. Gao, Baojun & Chan, Wai Kin (Victor) & Li, Hongyi, 2015. "On the increasing inequality in size distribution of China's listed companies," China Economic Review, Elsevier, vol. 36(C), pages 25-41.
    9. Matthias Duschl & Shi-Shu Peng, 2013. "Chinese firm dynamics and the role of ownership type A conditional estimation approach of the Asymmetric Exponential Power (AEP) density," Papers on Economics and Evolution 2014-01, Philipps University Marburg, Department of Geography.
    10. Omar Blanco Arroyo & Simone Alfarano, 2017. "Granularity of the Business Cycle Fluctuations: The Spanish Case," Economía Coyuntural,Revista de temas de perspectivas y coyuntura, Instituto de Investigaciones Económicas y Sociales 'José Ortiz Mercado' (IIES-JOM), Facultad de Ciencias Económicas, Administrativas y Financieras, Universidad Autónoma Gabriel René Moreno, pages 31-58.
    11. M. Capasso & E. Cefis & K. Frenken, 2009. "Do some firms persistently outperform?," Working Papers 09-, Utrecht School of Economics.
    12. Matthias Duschl & Thomas Brenner, 2011. "Characteristics of Regional Industry-specific Employment Growth – Empirical Evidence for Germany," Working Papers on Innovation and Space 2011-07, Philipps University Marburg, Department of Geography.
    13. Ramón Rufín & Cayetano Medina, 2008. "Market delimitation, firm survival and growth in service industries," The Service Industries Journal, Taylor & Francis Journals, pages 1401-1417.
    14. Toke Reichstein & Michael Dahl & Bernd Ebersberger & Morten Jensen, 2010. "The devil dwells in the tails," Journal of Evolutionary Economics, Springer, pages 219-231.

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