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Bankruptcy and Voluntary Liquidation: Evidence for New Firms in East and West Germany after Unification

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  • Prantl, Susanne

Abstract

Exploiting the unique economic situation after German unification, I investigate how exit decisions deviate between new firms in a transition and a comparatively stable market environment. Two competing exit mechanisms are considered: entrepreneurial self-selection via voluntary liquidation and external selection based on insolvency regulation. Distinguishing between the competing exit modes proves to be crucial in semi-parametric propor- tional hazard-rate estimations. Comparing East and West Germany, I find distinct education and size effects and a higher share of bankruptcy-related liquidations in East Germany. These results are argued to reflect different industry structures, capital and labor market conditions in both parts of Germany.

Suggested Citation

  • Prantl, Susanne, 2003. "Bankruptcy and Voluntary Liquidation: Evidence for New Firms in East and West Germany after Unification," ZEW Discussion Papers 03-72, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  • Handle: RePEc:zbw:zewdip:1682
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    Citations

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    Cited by:

    1. Sofie Balcaen & Sophie Manigart & Hubert Ooghe, 2011. "From distress to exit: determinants of the time to exit," Journal of Evolutionary Economics, Springer, vol. 21(3), pages 407-446, August.
    2. Metzger, Georg, 2006. "Afterlife: Who Takes Heart for Restart?," ZEW Discussion Papers 06-038, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    3. Nulsch, Nicole, 2014. "Is Subsidizing Companies in Difficulties an Optimal Policy? An Empirical Study on the Effectiveness of State Aid in the European Union," IWH Discussion Papers 9/2014, Halle Institute for Economic Research (IWH).
    4. repec:zbw:zewexp:161820 is not listed on IDEAS
    5. repec:zbw:zewexp:161819 is not listed on IDEAS
    6. Sandra Gottschalk & Francis J. Greene & Bettina Müller, 2017. "The impact of habitual entrepreneurial experience on new firm closure outcomes," Small Business Economics, Springer, vol. 48(2), pages 303-321, February.
    7. Balcaen,S. & Buyze, J. & Ooghe,H., 2009. "Financial distress and firm exit: determinants of involuntary exits, voluntary liquidations and restructuring exits," Vlerick Leuven Gent Management School Working Paper Series 2009-21, Vlerick Leuven Gent Management School.
    8. Müller, Bettina, 2006. "Human capital and successful academic spin-off," ZEW Discussion Papers 06-081, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    9. Fier, Andreas & Heneric, Oliver, 2005. "Public R&D Policy: The Right Turns of the Wrong Screw? The Case of the German Biotechnology Industry," ZEW Discussion Papers 05-60, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

    More about this item

    Keywords

    Exit; Bankruptcy; Voluntary Liquidation; Transition Economy; Duration Analysis;

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • P30 - Economic Systems - - Socialist Institutions and Their Transitions - - - General
    • P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies

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