Testing Gibrat's Law for European Multinational Enterprises

This paper investigates the link between firm size and growth for European multinational enterprises based on the AMADEUS firm-level database. Using data for about 20,000 firms for the period of 2000–2004, we find that firm size has a significant negative impact on firm growth of the multinational enterprises. This holds when growth and ist level are measured in terms of employment or turnover. Estimates for seven broad industry groups reveal that the negative relationship can be observed in all industries, with greater effects in business services and in the investment goods industry. Furthermore we find that the average year of foundation of the foreign affiliates has a positive impact on the growth of the parent companies.