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Testing Gibrat's Law for European Multinational Enterprises

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  • Martin Falk

    (WIFO)

Abstract

This paper investigates the link between firm size and growth for European multinational enterprises based on the AMADEUS firm-level database. Using data for about 20,000 firms for the period of 2000–2004, we find that firm size has a significant negative impact on firm growth of the multinational enterprises. This holds when growth and ist level are measured in terms of employment or turnover. Estimates for seven broad industry groups reveal that the negative relationship can be observed in all industries, with greater effects in business services and in the investment goods industry. Furthermore we find that the average year of foundation of the foreign affiliates has a positive impact on the growth of the parent companies.

Suggested Citation

  • Martin Falk, 2008. "Testing Gibrat's Law for European Multinational Enterprises," WIFO Studies, WIFO, number 34231, August.
    • Handle: RePEc:wfo:wstudy:34231
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    References listed on IDEAS

    as
    1. Alex Coad, 2007. "Firm Growth: a Survey," Post-Print halshs-00155762, HAL.
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    7. Jozef Konings & Alan Patrick Murphy, 2006. "Do Multinational Enterprises Relocate Employment to Low-Wage Regions? Evidence from European Multinationals," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 142(2), pages 267-286, July.
    8. Geroski, Paul A, 1999. "The Growth of Firms in Theory and in Practice," CEPR Discussion Papers 2092, C.E.P.R. Discussion Papers.
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    Keywords

    FIW multinationals;

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