Gibrat's law and legacy for non-profit organisations: a non-parametric analysis
- Autores: Peter G. Backus
- Localización: Documents de treball IEB, Nº. 8, 2012, 23 págs.
- Idioma: inglés
- Enlaces
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Resumen
Gibrat�s Law of proportional effect (i.e. growth is independent of initial size) has been tested for firms for several decades. In this paper I test Gibrat�s Law for charities in England and Wales through time. Using a data set based on the population of registered charities from 1998 to 2009, I am able to test the �ex ante� hypothesis that Gibrat�s Law holds over the long run for a sample of charities as well as testing Gibrat�s Legacy (that Gibrat�s Law holds for large and mature organisations), the �ex post� hypothesis. I use nonparametric local polynomial smoothing techniques which are more robust to the issues of autocorrelation, sample selection and truncation that make the conventional parametric approaches to testing Gibrat�s Law difficult in practice. Results suggest that the dynamic processes driving growth in the charitable sectors may differ from those driving the growth of firms. Unlike for-profit firms Gibrat�s Law is found to generally hold when controlling for selection both �ex ante� and �ex post�. Results may be driven by the absence of a minimum efficient scale which charities must achieve to survive and the different funding profiles of charities.
