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Business failure and change: an Australian perspective

Author

Listed:
  • Ian Bickerdyke

    (Productivity Commission)

  • Ralph Lattimore

    (Productivity Commission)

  • Alan Madge

    (Productivity Commission)

Abstract

„h Contrary to common perceptions, most Australian businesses survive for a considerable time ¡V for example, around two¡Vthirds of businesses are still operating after five years and almost one¡Vhalf are still operating after ten years. „h Around 7.5 per cent of businesses exit each year ¡V cessations account for around 80 per cent of exits (changes in ownership account for the remainder) ¡V but most exits are not firm failures. „h Each year, cessations account for, at most, between 9¡V10 per cent of total job losses and 3¡V4 per cent of GDP ¡V however, in net terms, these impacts are outweighed by the corresponding gains from new business start¡Vups. „h Less than 0.5 per cent of businesses exit each year due to ¡¥catastrophic¡¦ failure (bankruptcy or liquidation). The failure rate has fallen significantly in the past decade ¡V the estimated failure rate was 3.6 failures per 1000 enterprises in 1999-00, one¡Vthird of the rate in 1991-92 ¡V the decline is attributable to fewer company liquidations, rather than any fall off in unincorporated business bankruptcies.

Suggested Citation

  • Ian Bickerdyke & Ralph Lattimore & Alan Madge, 2001. "Business failure and change: an Australian perspective," Labor and Demography 0105002, EconWPA.
  • Handle: RePEc:wpa:wuwpla:0105002
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    More about this item

    Keywords

    business failure - small business - business exits - business survival - insolvency - liquidation - bankcruptcy;

    JEL classification:

    • M - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics

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