While Gibrat's Law assumes that growth rate variance is independent of size, empirical work has usually found a negative relationship between growth rate variance and firm growth. Using data on French manufacturing firms, we observe a relatively low, but statistically significant, negative relationship between firm size and growth rate variance. Furthermore, we observe that growth rate variance does not decrease monotonically the more plants a firm possesses, which is at odds with a number of theoretical models.
|Publication status||Published - 2008 Mar 12|
ASJC Scopus subject areas
- Economics, Econometrics and Finance(all)