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

Author

Listed:
  • 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.)

Suggested Citation

  • Bhattacharje,e A. & C.Higson & S.Holly & P.Kattuman, 2002. "Macro Economic Instability and Business Exit: Determinants of Failures and Acquisitions of Large UK Firms," Royal Economic Society Annual Conference 2002 27, Royal Economic Society.
    • Handle: RePEc:ecj:ac2002:27
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    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

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