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Alex Coad
''Firm growth and scaling of growth rate variance in multiplant firms''
( 2008, Vol. 12 No.9 )
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.
JEL: L2 - Firm Objectives, Organization, and Behavior: General
Manuscript Received : Dec 03 2007 Manuscript Accepted : Mar 12 2008

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