Regresar

The law of Gibrat applied in the manufacturing SMEs of Ecuador

Abstract:

The present investigation analyses the relationship between the size of the companies and their growth in contrast to Gibrat's law, for which it analyses a sample of 2,915 Ecuadorian manufacturing companies in the period 2012-2016. We apply regression by quantiles for panel data in order to establish the effect of variables with business characteristics and financial performance on the company's growth measured through sales and the number of employees. The results show that smaller companies grow at higher rates than larger companies. This evidence allows us to reject Gibrat's law since there is a negative relationship between the size and growth of manufacturing companies.