Does Gibrat’s Law Hold for Retailing? Evidence from Sweden
Sven-Olov Daunfeldt, Niklas Elert och Åsa Lang
2011
Abstract: 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.
Keywords: firm dynamics,
firm size, firm growth, retail
JEL
classifications: L11; L25;
L81
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