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New Firm Survival: The Effects of Start-up Characteristics

Listed author(s):
  • Nancy Huyhebaert

    (Katholieke Universieit Leuven, Belgium)

  • Ann Gaeremynck

    (Katholieke Universieit Leuven, Belgium)

  • Filip Roodhooft

    (Katholieke Universieit Leuven, Belgium)

  • Linda M.. Van de Gucht

    (Katholieke Universieit Leuven, Belgium)

This paper empirically examines the influence of operating activities and financial and investment decisions in the start-up year on post-entry survival, taking industry effects into account. Compared to traditional financial ratios, we find that funds flow measures are superior in identifying those start-up characteristics that are related to subsequent failure. In the first year, failed firms typically generate less cash flows, incur higher labour expenses, use more trade credit and financial debt, limit inventories and are cash constrained. Surprisingly, industry effects do not have a significant impact. From these results, we draw conclusions for public policy. Copyright Blackwell Publishers Ltd 2000.

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Article provided by Wiley Blackwell in its journal Journal of Business Finance & Accounting.

Volume (Year): 27 (2000-06)
Issue (Month): 5&6 ()
Pages: 627-651

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Handle: RePEc:bla:jbfnac:v:27:y:2000-06:i:5&6:p:627-651
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