The present paper deals with the question whether "Gibrat's law" is applicable to Italian mechanical companies active between 1997 and 1999 or not. The analysis was carried out at a spatial level splitting companies in four macro-regions: North-West, North-East, Centre and South. On the basis of a set of descriptive and inferential tools, we find that firm size, measured by total assets, follows approximately a log-normal distribution in at least two of the four analyzed macro-regions. Nevertheless, log-normality is only one necessary but not sufficient condition for the validity of the Gibrat's law. Thus, we analyzed the influence of firm size on growth rate finding a negative relation between the two variables in all macro-regions. This is a clear violation of Gibrat's law. Another violation was found by the application of an econometric model which evidences the persistence of growth.

Testing Gibrat’s law in italian macro-regions: analysis on a panel of mechanical companies

GROSSI, Luigi;
2005-01-01

Abstract

The present paper deals with the question whether "Gibrat's law" is applicable to Italian mechanical companies active between 1997 and 1999 or not. The analysis was carried out at a spatial level splitting companies in four macro-regions: North-West, North-East, Centre and South. On the basis of a set of descriptive and inferential tools, we find that firm size, measured by total assets, follows approximately a log-normal distribution in at least two of the four analyzed macro-regions. Nevertheless, log-normality is only one necessary but not sufficient condition for the validity of the Gibrat's law. Thus, we analyzed the influence of firm size on growth rate finding a negative relation between the two variables in all macro-regions. This is a clear violation of Gibrat's law. Another violation was found by the application of an econometric model which evidences the persistence of growth.
2005
Gibrat's law; Firm growth rate distribution; Firm size distribution
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11562/230242
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