Firm Closure, Financial Losses and the Consequences for an Entrepreneurial Restart
AbstractMany entrepreneurs who close a business are actually willing to venture anew. However, to realize a restart is not only a matter of willingness on the part of the entrepreneur but also of its feasibility. Regarding the feasibility of a restart, the aspect of capital acquisition might be particularly precarious for renascent entrepreneurs since business closures are likely to come up with financial losses. Financial losses arising from business closure can befall various stakeholders : shareholders, banks and public institutions, or suppliers and other stakeholders. The major finding of this analysis is that financial losses due to business closure strongly influence the likelihood of entrepreneurial restart yet only when losses are incurred by banks. Losses which are incurred privately by the entrepreneurs or by other stakeholders do not influence the restart likelihood. Entrepreneurs who would seek to continue their entrepreneurial career after a business closure would be well advised to avoid causing losses at banks. --
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Bibliographic InfoPaper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 08-094.
Date of creation: 2008
Date of revision:
Firm closure; financial loss; restart;
Find related papers by JEL classification:
- M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
- L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
- G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-06-10 (All new papers)
- NEP-BEC-2009-06-10 (Business Economics)
- NEP-ENT-2009-06-10 (Entrepreneurship)
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- Federico Pablo & Antonio GarcÃƒÂa-Tabuenca & MarÃƒÂa Teresa Gallo & Juan Luis Santos & TomÃƒÂ¡s Mancha, 2012. "Agent-based modeling: A promising way for modeling entrepreneurial activity from location perspective," ERSA conference papers ersa12p551, European Regional Science Association.
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