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Bankruptcy and Voluntary Liquidation: Evidence for New Firms in East and West Germany after Unification

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  • Prantl, Susanne
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    Abstract

    Exploiting the unique economic situation after German unification, I investigate how exit decisions deviate between new firms in a transition and a comparatively stable market environment. Two competing exit mechanisms are considered: entrepreneurial self-selection via voluntary liquidation and external selection based on insolvency regulation. Distinguishing between the competing exit modes proves to be crucial in semi-parametric propor- tional hazard-rate estimations. Comparing East and West Germany, I find distinct education and size effects and a higher share of bankruptcy-related liquidations in East Germany. These results are argued to reflect different industry structures, capital and labor market conditions in both parts of Germany. --

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    Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 03-72.

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    Date of creation: 2003
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    Handle: RePEc:zbw:zewdip:1682

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    Keywords: Exit; Bankruptcy; Voluntary Liquidation; Transition Economy; Duration Analysis;

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    Cited by:
    1. Bettina Müller, 2006. "Human Capital and Successful Academic Spin-Off," Working Papers of the Research Group Heterogenous Labor, Research Group Heterogeneous Labor, University of Konstanz/ZEW Mannheim 06-14, Research Group Heterogeneous Labor, University of Konstanz/ZEW Mannheim.
    2. S. Balcaen & J. Buyze & H. Ooghe, 2009. "Financial distress and firm exit: determinants of involuntary exits, voluntary liquidations and restructuring exits," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium, Ghent University, Faculty of Economics and Business Administration 09/598, Ghent University, Faculty of Economics and Business Administration.
    3. Fier, Andreas & Heneric, Oliver, 2005. "Public R&D Policy: The Right Turns of the Wrong Screw? The Case of the German Biotechnology Industry," ZEW Discussion Papers 05-60, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    4. Nicole Nulsch, 2014. "Is Subsidizing Companies in Difficulties an Optimal Policy? An Empirical Study on the Effectiveness of State Aid in the European Union," IWH Discussion Papers, Halle Institute for Economic Research 9, Halle Institute for Economic Research.
    5. S. Balcaen & S. Manigart & H. Ooghe, 2009. "From distress to exit: determinants of the time to exit," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium, Ghent University, Faculty of Economics and Business Administration 09/588, Ghent University, Faculty of Economics and Business Administration.
    6. Metzger, Georg, 2006. "Afterlife: Who Takes Heart for Restart?," ZEW Discussion Papers 06-38, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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