Aslan, Alper (2008): Testing Gibrat’s law: empirical evidence from panel unit root tests of turkish firms. Published in: International Research Journal of Finance and Economics , Vol. June, No. 16 (June 2008)
Download (62kB) | Preview
The purpose of this paper is to use panel unit root tests to see if Gibrat’s law holds in Turkey. Gibrat's Law establishes that firm growth is a random walk, it means that the probability of a given proportional change in size during a specified period is the same for all firms in a given industry. In this paper, it is examined Gibrat law in Turkey empirically by using Chen & Lu (2003) methodology and use the panel unit root method to investigate the relation between firm size and firm growth. Since it has been observed that many panel unit root tests are invalid when cross-section correlation problem and also finds that conclusion is not the same.
|Item Type:||MPRA Paper|
|Original Title:||Testing Gibrat’s law: empirical evidence from panel unit root tests of turkish firms|
|Keywords:||Gibrat’s Law, Firm Growth, MADF Test|
|Subjects:||L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L11 - Production, Pricing, and Market Structure ; Size Distribution of Firms
L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L20 - General
|Date Deposited:||19. Sep 2008 13:32|
|Last Modified:||12. Feb 2013 12:18|
Abuaf, N., & Jorion, P. 1990. “Purchasing power parity in the long run” The Journal of Finance, 45, 157–74.
Almus, M., & Nerlinger, E. 2000. “Testing Gibrat’s Law for young firms – empirical results for West Germany” Small Business Economics, 15(1), 1–12.
Audretsch, D. 1995. Innovation and Industry Evolution (Cambridge, MA: MIT Press).
Audretsch, D., Santarelli E., & Vivarelli M.1999. “Start-Up Size and Industrial Dynamics: Some Evidence from Italian Manufacturing” International Journal of Industrial Organization, 17(7), 965-983.
Becchetti, L., & Trovato, G. 2002. “The determinants of growth for small and medium sized firms” Small Business Economics, 19(4), pp. 291–306.
Caves, R. E. 1998. “Industrial Organization and New Findings on the Turnover and Mobility of Firms” Journal of Economic Literature, 36:1947-1982.
Chen, J.& Lu, W. 2003. “Panel unit root tests of firm size and its growth” Applied Economics Letters, 10(6), 343–45.
Del Monte, A., & Papagni, E. 2003. “R&D and the growth of firms: an empirical analysis of a panel of Italian firms” Research Policy, 32(6), pp. 1003–14.
Diebold, F.X., & Nerlove, M. 1990. “Unit Roots in Economic Time Series: a Selected Survey” In Fomby, T. and Rhodes, E. (eds.), Advances in Econometrics: Cointegration, Spurious Regressions and Unit Roots (JAI Press, Greenwich).
Dunne T., Roberts M., & Samuelson L. 1989. “The Growth and Failure of US Manufacturing Plants” Quarterly Journal of Economics,104(4), pp.671-698.
Dunne, P. & Hughes, A. 1994. “Age, size, growth and survival: UK companies in the late 1980’s” Journal of Industrial Economics, 42(2), pp. 115–140.
Evans, David 1987a. “The Relationship Between Firm Growth, Size, and Age: Estimates for100 Manufacturing Industries” Journal of Industrial Economics, 35(4), pp. 567-581.
Evans, D. 1987b. “Tests of alternative theories of firm growth” Journal of Political Economy, 95(4), pp. 657–74.
Geroski, P. 2000. The Growth of Firms in Theory and Practice. Oxford University Press: Oxford, pp. 168–186.
Geroski P.A., Lazarova S., Urga G., & Walters, F. 2003. “Are differences in firm size transitory or permanent?” Journal of Applied Econometrics, 18(1), pp. 47–59.
Gibrat, Robert 1931. Les Inégalités Économiques, Paris, Sirey.
Goddard, J., Wilson J., & Blandon P. 2002. “Panel tests of Gibrat’s Law for Japanese manufacturing” International Journal of Industrial Organization, 20(3), pp. 415–33.
Hall, B. 1987. “The relationship between firm size and firm growth in the US manufacturing sector” Journal of Industrial Economics, 35(4), pp. 583–606.
Harhoff, D., Konrad S., & Woywode M. 1998. “Legal Form, Growth and Exit of West German Firms-Empirical Results for Manufacturing, Construction, Trade and Service Industries” Journal of Industrial Economics, 46(4), pp. 453-488.
Hart, P.E. 1962. “Size and growth of firms”Economica, 29(1), pp. 29–39.
Hart, P.E., & Oulton, N. 1996. “The size and growth of firms” Economic Journal, 106, 1242-1252.
Im, K. S., Pesaran, M. H. & Shin, Y. 1997. “Testing for unit roots in heterogeneous panel” Mimeo, Department of Applied Economics, University of Cambridge.
Kristian J.. 2005. ”Cross-sectional Dependency and Size Distortion in a Small-sample Homogeneous Panel Data Unit Root Test” Oxford Bulletin of Economics and Statistics, 67.
Kumar, M.S., 1985. “Growth, acquisition activity and firm size: evidence from the United Kingdom” Journal of Industrial Economics, 33, 327–338.
Lotti, F., Santarelli, E. & Vivarelli, M. 1999. “Does Gibrat's Law hold among young, small firms?” Paper presented at the 40th Annual SIE Conference, Ancona, Italy. 29-30 October 1999.
Levin, A. & Lin, C. F. 1992. “Unit root tests in panel data: asymptotic and finite-sample properties” Mimeo, University of California, San Diego.
Mata, J. 1994. “Firm growth during infancy”, Small Business Economics, 6(1), pp. 27–39.
Mansfield, E. 1962. “Entry, Gibrat’s Law, Innovation and the Growth of Organizations” American Economic Review, 52:1023-51.
Oliveira, B., & Fortunato, A. 2003. “Does the firm growth follow a random walk? An application with panel data unit root test” Paper presented to the EUNIP conference, Porto, Portugal.
Oliveira, B., & Fortunato, A. 2006. “Testing Gibrat’s law: Empirical Evidence From A Panel of Portuguese Manufacturing Firms” International Journal of the Economics of Business, 13, No. 1, February 2006, pp. 65-81
O’Connell, P. 1998. “The overvaluation of purchasing power parity” Journal of International Economics, 44, 1–19.  Singh, A., & Whittington, G., 1975. “The size and growth of firms” Review of Economic Studies, 42, 15–26
Simon, H., & Bonini C. P. 1958. “The Size Distribution of Business Firms” American Economic Review, 58(4), pp. 607-617.
Sutton, J. 1997. “Gibrat’s Legacy” Journal of Economic Literature, 35: 40-59.
Taylor, M. P. & Sarno, L. 1998. “The behavior of real Exchange rates during the post-Bretton Woods period” Journal of International Economics, 46, 281–312.
Utton, M.A. 1971. “The effect of mergers on concentration: UK manufacturing industry 1954–65” Journal of Industrial Economics, 20, 42–58.
Wagner, J. 1992. “Firm Size, Firm Growth, and Persistence of Chance: Testing Gibrat’s Law with Establishment Data from Lower Saxony” Small Business Economics, 4(2), pp. 125-131.
Weiss, C. R. 1998. “Size, Growth, and Survival in the Upper Austrian Farm Sector” Small Business Economics, 10(4), pp. 305-312.