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Heterogeneous Exits: Evidence from New Firms

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  • Kato, Masatoshi
  • Honjo, Yuji

Abstract

This paper explores heterogeneous exits-bankruptcy, voluntary liquidation, and merger-by focusing on new firms. Using a sample of approximately 16,000 firms founded in Japan during 1997-2004, we examine the determinants of new-firm exit according to forms of exit. Regarding industry-specific characteristics, our findings indicate that new firms in capital-intensive and R&D-intensive industries are less likely to go bankrupt. In industries characterized by large amounts of capital and low price-cost margins, new firms are more likely to exit through voluntary liquidation and merger. Region-specific characteristics, such as regional agglomeration and unemployment rate, have significant effects on the hazards of exit, and their effects vary across different forms of exit. Moreover, we provide evidence that firm-specific characteristics, such as the number of employees, and entrepreneur-specific characteristics, such as educational background and age, play significantly different roles in determining each form of exit.

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File URL: http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/18743/1/wp2010-3.pdf
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Bibliographic Info

Paper provided by Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University in its series CEI Working Paper Series with number 2010-3.

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Length: 38 p.
Date of creation: Oct 2010
Date of revision:
Handle: RePEc:hit:hitcei:2010-3

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Keywords: New firm; exit; bankruptcy; voluntary liquidation; merger; competing risks proportional hazards model;

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  1. Silviano Esteve-Pérez & Amparo Sanchis-Llopis & Juan Sanchis-Llopis, 2010. "A competing risks analysis of firms’ exit," Empirical Economics, Springer, vol. 38(2), pages 281-304, April.
  2. Hielke Buddelmeyer & Paul H. Jensen & Elizabeth Webster, 2010. "Innovation and the determinants of company survival," Oxford Economic Papers, Oxford University Press, vol. 62(2), pages 261-285, April.
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