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Does Gibrat’s Law Hold for Retailing? Evidence from Sweden

  • Daunfeldt, Sven-Olov

    ()

    (The Ratio Institute and Dalarna University)

  • Elert, Niklas

    ()

    (The Ratio Institute and Dalarna University)

  • Lang, Åsa

    (Dalarna University and Mid Sweden University)

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.

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Paper provided by The Ratio Institute in its series Ratio Working Papers with number 164.

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Length: 33 pages
Date of creation: 08 Mar 2011
Date of revision:
Handle: RePEc:hhs:ratioi:0164
Contact details of provider: Postal: The Ratio Institute, P.O. Box 5095, SE-102 42 Stockholm, Sweden
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