Determinants of Firm Growth : Empirical Evidence from Swiss Listed Companies

There is a wide range of literature on the theory of firm growth with contradictory results. However, hardly any studies touch the determinants of firm growth taking Swiss listed firms into consideration. For this purpose we apply a pooled and fixed effects panel regression to a set of firm specific and macroeconomic variables. The sample comprises 349 Swiss listed firms yielding more than 2,000 observations from 1999 to 2014. We are able to reject Gibrat's Law stating that large firms grow faster than small ones. Furthermore, we find evidence for significantly larger growth rates in the consumer sector, which includes the pharmaceutical industry, in comparison to other sectors. From a macroeconomic point of view growth rates in GDP and inflation are important determinants of firm growth showing up a positive relationship. The domestic stock market does predict growth rates adequately since there is a significant positive relationship between the Swiss Market Index and the applied dependent variables. On a firm specific level we examine that mature firms tend to grow slower than young companies. Leverage is positively related to firm growth as well as profitability. Finally, we indicate that family owned businesses grow slower than non-family owned firms