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Macro Economic Instability and Business Exit: Determinants of Failures and Acquisitions of Large UK Firms

  • Bhattacharje,e A.

    (Reserve Bank of India)

  • C.Higson

    (London Business School)

  • S.Holly

    (University of Cambridge)

  • P.Kattuman

Using data over a 34-year span on UK quoted firms, this paper seeks to identify the factors that increase the likelihood of exit of firms. Firms may disappear through the mutually precluding events of bankruptcies and acquisitions. We use a competing-risks hazard model to determine characteristics leading to each outcome. Hazard models make use of the data on timing of these alternative outcomes and we exploit this to focus attention on how the hazards change over the business cycles, conditional on the post-listing age of the firm. We find that the volatility in macro environment has a role in determining, in different ways, the hazard of firms going bankrupt or being acquired.

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Paper provided by Royal Economic Society in its series Royal Economic Society Annual Conference 2002 with number 27.

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Date of creation: 29 Aug 2002
Date of revision:
Handle: RePEc:ecj:ac2002:27
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