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Borrowing Patterns, Bankruptcy and Voluntary Liquidation

Author

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  • José Mata
  • António R. Antunes
  • Pedro Portugal

Abstract

We study the impact of financial variables upon bankruptcy and voluntary exit. Controlling for efficiency, which we find to decrease the odds of both bankruptcy and voluntary exit, characteristics of firms which correlate with the firms' access to funds, exert very different impacts upon the two modes of exit.Our findings support the idea that information asymmetries create cash constraints and that financial decisions are used to signal firms' quality and reduce the degree of information asymmetries between borrowers and lenders.

Suggested Citation

  • José Mata & António R. Antunes & Pedro Portugal, 2010. "Borrowing Patterns, Bankruptcy and Voluntary Liquidation," Working Papers w201027, Banco de Portugal, Economics and Research Department.
  • Handle: RePEc:ptu:wpaper:w201027
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    File URL: https://www.bportugal.pt/sites/default/files/anexos/papers/wp201027.pdf
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    References listed on IDEAS

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    1. Holtz-Eakin, Douglas & Joulfaian, David & Rosen, Harvey S, 1994. "Sticking It Out: Entrepreneurial Survival and Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 102(1), pages 53-75, February.
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    Cited by:

    1. Gabriela Castro & José R. Maria & Paulo Júlio & Ricardo Mourinho Félix, 2013. "Fiscal multipliers in a small euro area economy: How big can they get in crisis times?," Working Papers w201311, Banco de Portugal, Economics and Research Department.
    2. Masatoshi Kato & Yuji Honjo, 2015. "Entrepreneurial human capital and the survival of new firms in high- and low-tech sectors," Journal of Evolutionary Economics, Springer, vol. 25(5), pages 925-957, November.
    3. Ricardo Martinho & António R. Antunes, 2012. "A Scoring Model For Portuguese Non-Financial Enterprises," Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.
    4. Castro, Gabriela & Félix, Ricardo M. & Júlio, Paulo & Maria, José R., 2015. "Unpleasant debt dynamics: Can fiscal consolidations raise debt ratios?," Journal of Macroeconomics, Elsevier, vol. 44(C), pages 276-294.
    5. Steffen Mueller & Jens Stegmaier, 2015. "Economic failure and the role of plant age and size," Small Business Economics, Springer, vol. 44(3), pages 621-638, March.

    More about this item

    JEL classification:

    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions

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