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Macro Economic Instability and Business Exit: Determinants of Failures and Acquisitions of Large UK Firms

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  • Bhattacharje,e A.

    (Reserve Bank of India)

  • C.Higson

    (London Business School)

  • S.Holly

    (University of Cambridge)

  • P.Kattuman

Abstract

Using data over a 34-year span on UK quoted firms, this paper seeks to identify the factors that increase the likelihood of exit of firms. Firms may disappear through the mutually precluding events of bankruptcies and acquisitions. We use a competing-risks hazard model to determine characteristics leading to each outcome. Hazard models make use of the data on timing of these alternative outcomes and we exploit this to focus attention on how the hazards change over the business cycles, conditional on the post-listing age of the firm. We find that the volatility in macro environment has a role in determining, in different ways, the hazard of firms going bankrupt or being acquired.

(This abstract was borrowed from another version of this item.)

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Bibliographic Info

Paper provided by Royal Economic Society in its series Royal Economic Society Annual Conference 2002 with number 27.

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Date of creation: 29 Aug 2002
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Handle: RePEc:ecj:ac2002:27

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Cited by:
  1. Arnab Bhattacharjee, 2005. "Models of Firm Dynamics and the Hazard Rate of Exits: Reconciling Theory and Evidence using Hazard Regression Models," CRIEFF Discussion Papers 0502, Centre for Research into Industry, Enterprise, Finance and the Firm.
  2. Diana Bonfim, 2006. "Credit Risk Drivers: Evaluating the Contribution of Firm Level Information and of Macroeconomic Dynamics," Economic Bulletin and Financial Stability Report Articles, Banco de Portugal, Economics and Research Department.
  3. Arnab Bhattacharjee & Madhuchhanda Bhattacharjee, 2007. "Bayesian Analysis of Hazard Regression Models under Order Restrictions on Covariate Effects and Ageing," Discussion Paper Series, Department of Economics 200707, Department of Economics, University of St. Andrews.
  4. Bhattacharjee, Arnab, 2004. "A Simple Test for the Absence of Covariate Dependence in Hazard Regression Models," MPRA Paper 3937, University Library of Munich, Germany.
  5. David Greenaway, & Joakim Gullstrand, & Richard Kneller, . "Live or Let Die? Alternative Routes to Industry Exit," Discussion Papers 07/10, University of Nottingham, GEP.
  6. J. David Brown & Julie L. Hotchkiss & Myriam Quispe-Agnoli, 2013. "Does Employing Undocumented Workers Give Firms A Competitive Advantage?," Journal of Regional Science, Wiley Blackwell, vol. 53(1), pages 158-170, 02.
  7. Arnab Bhattacharjee & Chris Higson & Sean Holly & Paul Kattuman, 2007. "Macroeconomic Conditions and Business Exit: Determinants of Failures and Acquisitions of UK Firms," CDMA Working Paper Series 200713, Centre for Dynamic Macroeconomic Analysis.
  8. Fai├žal Belaid, 2014. "Loan quality determinants: evaluating the contribution of bank-specific variables, macroeconomic factors and firm level information," IHEID Working Papers 04-2014, Economics Section, The Graduate Institute of International Studies.
  9. Arnab Bhattacharjee & Chris Higson & Sean Holly, 2014. "Asymmetric Price Adjustment, Sticky Costs and Operating Leverage over the Business Cycle," SEEC Discussion Papers 1402, Spatial Economics and Econometrics Centre, Heriot Watt University.
  10. Alessandra Amendola & Marialuisa Restaino & Luca Sensini, 2013. "Corporate Financial Distress And Bankruptcy: A Comparative Analysis In France, Italy And Spain," Global Economic Observer, "Nicolae Titulescu" University of Bucharest, Faculty of Economic Sciences & Institute for World Economy of the Romanian Academy, vol. 1(2), pages 131-142, November.
  11. Marcus Box, 2008. "The death of firms: exploring the effects of environment and birth cohort on firm survival in Sweden," Small Business Economics, Springer, vol. 31(4), pages 379-393, December.
  12. Philip Bunn & Victoria Redwood, 2003. "Company accounts based modelling of business failures and the implications for financial stability," Bank of England working papers 210, Bank of England.
  13. repec:diw:diwfin:diwfin01050 is not listed on IDEAS

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