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

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Author Info
Prantl, Susanne
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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Related research
Keywords: Exit Bankruptcy Voluntary Liquidation Transition Economy Duration Analysis

Find related papers by JEL classification:
C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Semiparametric and Nonparametric Methods
C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis
L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
P30 - Economic Systems - - Socialist Institutions and Their Transitions - - - General
P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Bettina Müller, 2006. "Human Capital and Successful Academic Spin-Off," Working Papers of the Research Group Heterogenous Labor 06-14, Research Group Heterogeneous Labor, University of Konstanz/ZEW Mannheim. [Downloadable!]
  2. Metzger, Georg, 2006. "Afterlife – Who Takes Heart for Restart?," ZEW Discussion Papers 06-38, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  3. Müller, Bettina, 2006. "Human capital and successful academic spin-off," ZEW Discussion Papers 06-81, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  4. 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. [Downloadable!]
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