Gibrat’s law and persistence of growth in Greek manufacturing

This study makes use of a sample of Greek manufacturing firms during 1995–2001 in order to analyze Gibrat’s law. We find Gibrat’s law is rejected for the total sample of firms, since persistence of growth plays a key role. The classification of firms in size and age groups, however, yields more interesting results: Gibrat’s law is rejected for micro, small, and young firms, since an inverse relationship between firm growth and initial firm size is found along with a persistence of growth rates in subsequent periods. In contrast, Gibrat’s law is accepted for medium, large, and old firms, implying that the growth patterns of these categories follow a random walk and do not tend to persist in subsequent periods.