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https://doi.org/10.1080/1331677X.2019.1655656

Testing the validity of Gibrat’s law in the context of profitability performance

Roman Fiala ; Department of Economic Studies, College of Polytechnics Jihlava, Jihlava, Czech Republic
Veronika Hedija ; Department of Economic Studies, College of Polytechnics Jihlava, Jihlava, Czech Republic


Puni tekst: engleski pdf 1.259 Kb

str. 2850-2863

preuzimanja: 372

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Sažetak

The purpose of the article is to investigate whether the profitability of firms affects the validity of Gibrat’s law. We begin with the thesis that small firms have less access to outside financial sources (especially bank loans) than large companies, so the role of profit in generating growth varies depending on firm size and is probably more important for smaller companies. We divided a large sample of companies (about 30,000 firms) into three profitability groups (lower 25%, middle 50%, and upper 25% of firms) to examine whether the size-growth relationship is influenced by profitability. Gibrat’s law was verified both at the aggregate level and at the industry level (using one-digit NACE classification). The results show that the validity of Gibrat’s law is not significantly influenced by the amount of firm profit at the aggregate level or at the industry level. In most sectors and profitability groups, smaller firms grow faster than their larger counterparts do.

Ključne riječi

firm growth; firm size; profitability; Gibrat’s law

Hrčak ID:

229597

URI

https://hrcak.srce.hr/229597

Datum izdavanja:

22.1.2019.

Posjeta: 668 *