FROM GIBRAT'S LEGACY TO GIBRAT'S FALLACY. A BAYESIAN APPROACH TO STUDY THE GROWTH OF FIRMS

Elena Cefis, Luigi Orsenigo and Matteo Ciccarelli

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: We aim at testing Gibrat's Law, a building block of the corporate growth dynamics. Using a Bayesian statistical framework that nests previous approaches, we provide evidence against Gibrat's law on average, within or across industries. Notwithstanding, data show only weak evidence of mean reversion, i.e. initial larger firms do not grow relatively slower than smaller firms. Moreover, differences in growth rates and in size steady state are persistent and firm-specific. Previous results confirming Gibrat's argument are likely to be incorrect being based on models that do not exploit appropriately all information contained in a panel data set.

Keywords: Gibrat's Law; Panel Data; Heterogeneity; Bayesian Estimation (search for similar items in EconPapers)
Pages: 52 pages
Date: 2002-10
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Published by Ivie

Downloads: (external link)
http://www.ivie.es/downloads/docs/wpasad/wpasad-2002-19.pdf Fisrt version / Primera version, 2002 (application/pdf)

Related works:
Working Paper: From Gibrat’s legacy to Gibrat’s fallacy. A Bayesian approach to study the growth of firms (2002)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:2002-19

Access Statistics for this paper

More papers in Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) Contact information at EDIRC.
Bibliographic data for series maintained by Departamento de Edición ().