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IS THERE A RELATIONSHIP BETWEEN FIRM SIZE AND FIRM GROWTH FOR PIG BREEDING SECTOR IN THE CZECH REPUBLIC?
Abstract
This article deals with the investigation of the relationship between firm size and firm growth for the firms from the subsector of pig breeding (0146 according to NACE classification), which are located in the Czech Republic. The paper aims to examine the validity of Gibrat’s law (Law of proportionate effect) which is devoted to size-growth link, in this subsector. Gibrat’s law states that growth of a firm is a random effect independent of firm size. We investigate the link during the years 2010 to 2016. The analysis is based on panel data from the Amadeus database. To investigate the size-growth link, we apply traditional Ordinary least square (OLS) regression. We use two indicators for measuring firm size – sales and total assets. The results show that Gibrat’s law is confirmed for both firm size indicators. There is no statistically significant relationship between firm size and firm growth for companies from pig breeding sub-industry in the Czech Republic. Thus, the firm growth is independent of firm size.
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