2019
DOI: 10.1080/1331677x.2019.1655656
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Testing the validity of Gibrat’s law in the context of profitability performance

Abstract: The purpose of the article is to investigate whether the profitability of firms affects the validity of Gibrat's law. We begin with the thesis that small firms have less access to outside financial sources (especially bank loans) than large companies, so the role of profit in generating growth varies depending on firm size and is probably more important for smaller companies. We divided a large sample of companies (about 30,000 firms) into three profitability groups (lower 25%, middle 50%, and upper 25% of fir… Show more

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Cited by 5 publications
(4 citation statements)
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References 45 publications
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“…The possible explanation can be that the smaller firms tend to grow quickly as compare to their counterparts. The negative impact of size on firm sales growth is consistent with (Quader, 2017;Oliveira & Fortunato, 2017;Abuhommous, 2017;Hedija, 2017;Krasniqi & Lajgi, 2018;Arouri et al, 2018;Fiala & Hedija, 2019;Yang &Tsou, 2019;Mbulawa & Ogbenna, 2019;Bai et al, 2020;Lin & Wu, 2020).…”
Section: Volatility and Firm Growthsupporting
confidence: 62%
“…The possible explanation can be that the smaller firms tend to grow quickly as compare to their counterparts. The negative impact of size on firm sales growth is consistent with (Quader, 2017;Oliveira & Fortunato, 2017;Abuhommous, 2017;Hedija, 2017;Krasniqi & Lajgi, 2018;Arouri et al, 2018;Fiala & Hedija, 2019;Yang &Tsou, 2019;Mbulawa & Ogbenna, 2019;Bai et al, 2020;Lin & Wu, 2020).…”
Section: Volatility and Firm Growthsupporting
confidence: 62%
“…The relationship between firm growth rate and firm size has been investigated in theoretical-conceptual and applied economic literature. Santarelli, Klomp, and Thurik (2006), Nassar, Almsafir, and Al-Mahrouq (2014), and the most recently Fiala and Hedija (2019) provide a review of studies and a summary of their conclusions on the validity of Gibrat's law.…”
Section: Previous Researchmentioning
confidence: 99%
“…The previous empirical results in the literature on the validity of Gibrat's (1931) law are mixed (Audretsch, Klomp, Santarelli, & Thurik, 2004;Fiala & Hedija, 2019;Lunardi, Miccich e, Lillo, Mantegna, & Gallegati, 2014;Srhoj, Zupic, & Jakli c, 2018;Stam, 2010). The literature among the drivers that can affect the validity of Gibrat's law identifies different factors such as minimum efficient scale of production, type of ownership, industry uncertainty and ownership structure (Fiala & Hedija, 2019).…”
Section: Previous Researchmentioning
confidence: 99%
“…CSR is more than a strategy, but at the same time outlines a firm assignment, which SMEs supposes to comply with the moral, social, ecological, and economic requirements from the local business partners in all markets where they are present. This positive image and broad stakeholder support can be a valuable extension of SMEs' resource bases that can be used to compete against larger firms that are less resource-constraint and ultimately influence SMEs performance (Fiala & Hedija, 2019).…”
Section: Introductionmentioning
confidence: 99%