Testing the Validity of Gibrat's Law in Slovakia: Quantile Approach

The aim of the paper is testing the validity of Gibrat's law in Slovakia. We use data for more than 40,000 Slovak firms and employ the sales as the measurement of firm size. To examine the size-growth relationship, we apply beside traditional Ordinary least square (OLS) regression also Quantile regression (QR) allowing us to analyse the size-growth link throughout size distribution. We reject the validity of Gibrat's law on aggregate level and also for individual quartile of size distribution. We identify the significant relationship between firm growth and firm size that vary depending on the firm size. These findings show that firm size class should be considered in firm growth analysis.