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Heterogeneous Exits: Evidence from New Firms

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  • Masatoshi Kato

    ()
    (School of Economics, Kwansei Gakuin University)

  • Yuji Honjo

    ()
    (Faculty of Commerce, Chuo University)

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://192.218.163.163/RePEc/pdf/kgdp64.pdf
File Function: First version, 2010
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Bibliographic Info

Paper provided by School of Economics, Kwansei Gakuin University in its series Discussion Paper Series with number 64.

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Length: 38 pages
Date of creation: Nov 2010
Date of revision: Nov 2010
Handle: RePEc:kgu:wpaper:64

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

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  1. 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.
  2. 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.
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