La Ley de Gibrat en las economías emergentesEl caso de Brasil

Abstract

Firm growth and profitability are the most important firm objectives. In this context, it is relevant to answer some questions such as why some firms grow and others do not. There are different theories to analyze firm growth, but Gibrat�s law is more followed than others because of its empirical analysis advantages. The results from these empirical analyses have important economics and social implications that can be useful for entrepreneurs, investors and public institutions. In this context, the aim of this Thesis is to analyze firm growth in Brazil. More precisely, we analyze whether firm size explains firm growth and consequently the validity of Gibrat's law. In addition we analyze the relationship between profitability and growth in Brazil during the period 2002-2013. To achieve the objectives of the thesis and due to the characteristics of the sample, we have employed the panel data methodology. The use of this methodology allows us to model the unobservable heterogeneity as well as to increase the number of observations and the degrees of freedom by obtaining consistent and robust results. Our overall results allow us to conclude that firm growth in Brazil is not a random process, rejecting Gibrat�s law. Finally, our results reveal the existence of a significant relationship between the most important firm objectives -firm growth and profitability. These findings persist even when the current financial crisis effect has been taken into account.