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Luiz A. Esteves
''A Note on Gibrat's Law, Gibrat''s Legacy and Firm Growth: Evidence from Brazilian Companies''
( 2007, Vol. 12 No.19 )
The aim of this work is to test the Gibrat's Law hypothesis for Brazilian firms. Gibrat''s Law establishes that firm growth is a random walk, it means that the probability of a given proportionale change in size during a specified period is the same for all firms in a given industry. This work uses information from manufacturing and services sectors, and it uses two different variables to compute firm growth: The growth of employment and the growth of value added. Gibrat''s Law was rejected for the complete sample of manufacturing and services firms - the smaller companies grow at larger rates. On the other hand, Gibrat''s Law is supported in both sectors when a subsample of large and well-established companies is used (Gibrat''s Legacy). These results corroborate the recent stylized facts of the literature.
Keywords: Firm Growth
JEL: L1 - Market Structure, Firm Strategy, and Market Performance: General
L2 - Firm Objectives, Organization, and Behavior: General
Manuscript Received : Sep 04 2007 Manuscript Accepted : Sep 05 2007

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