Does Gibrat’s Law Hold for Swedish Energy Firms?

Ali Tang ()
Additional contact information
Ali Tang: HUI Research, Postal: HUI Research, SE-10329, Stockholm, Sweden and Dalarna University, SE-79188 Falun, Sweden,

No 99, HUI Working Papers from HUI Research

Abstract: Gibrat’s law predicts that firm growth is purely random and should be independent of firm size. We use a random effects–random coefficient model to test whether Gibrat’s law holds at the firm level in the Swedish energy market. No study has investigated whether Gibrat’s law holds for individual firms in the energy sector. The present results support the claim that Gibrat’s law is more likely to be rejected ex ante when an entire firm population is considered, but more likely to be confirmed ex post after market selection has “cleaned” the original population of firms or when the analysis treats more disaggregated data. From a theoretical viewpoint, the results are consistent with models based on passive and active learning, indicating a steady state in the firm expansion process and that, before it is achieved, Gibrat’s law is violated in the short term, but holds in the long term when firms have reached a “steady state”. These results indicate that approximately 70% of firms in the Swedish energy sector are in steady state, with only random fluctuations in size around that level over the 15 studied years.

Keywords: firm size; firm growth; random coefficient; energy sector (search for similar items in EconPapers)
JEL-codes: D22 L11 L25 L26 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2014-01-29
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.hui.se/BinaryLoader.axd?OwnerID=3a57705 ... .pdf&Attachment=True (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.hui.se/BinaryLoader.axd?OwnerID=3a577059-d869-4d1b-bff1-5673eefc3461&OwnerType=0&PropertyName=EmbeddedFile_f5b918b4-325a-4201-843d-906a3a1ab315&FileName=HUIwp99.pdf&Attachment=True [301 Moved Permanently]--> https://www.hui.se/BinaryLoader.axd?OwnerID=3a577059-d869-4d1b-bff1-5673eefc3461&OwnerType=0&PropertyName=EmbeddedFile_f5b918b4-325a-4201-843d-906a3a1ab315&FileName=HUIwp99.pdf&Attachment=True [301 Moved Permanently]--> https://hui.se/BinaryLoader.axd?OwnerID=3a577059-d869-4d1b-bff1-5673eefc3461&OwnerType=0&PropertyName=EmbeddedFile_f5b918b4-325a-4201-843d-906a3a1ab315&FileName=HUIwp99.pdf&Attachment=True)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:huiwps:0099

Access Statistics for this paper

More papers in HUI Working Papers from HUI Research Handelns Forskningsinstitut, c/o HUI Research, Regeringsgatan 60, 103 29 Stockholm, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Hans Seerar Westerberg ().