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IS THE FIRM SIZE DETERMINANT OF FIRM GROWTH IN SLOVAKIA?
Abstract
The paper focuses on the examination of the relationship between firm size and firm growth for the companies in Slovakia during years 2009 – 2016. The aim of the article is to investigate the validity of Gibrat’s law (Law of proportionate effect), so if the firm growth is a stochastic process resulting from a lot of unobserved random variables and firm growth is independent of the firm size. For measuring company size, it was used three number of employees. This firm size indicator is most often used in studies dealing with Law of proportionate effect. The data are taken from Amadeus database. We focused on the sample of profit industries – sectors A-N according to CZ-NACE classification. In individual years, the research sample includes 20% of all companies doing business in Slovakia. The validity of Gibrat’s law was tested with the help of the linear regression model with the first-order autoregressive process. We found that firm growth is dependent on firm size, large companies grow more slowly than smaller ones.
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