Heterogeneous Exits: Evidence from New Firms



This paper explores heterogeneous exits---bankruptcy, voluntary liquidation, and merger---as the post-entry performance of new firms. Using a sample of approximately 16,000 firms founded in Japan during 1997-2004, we examine the determinants of new-firm exit according to forms of exit. Regarding industry-specific characteristics, our findings indicate that new firms are less likely to go bankrupt in capital-intensive and R&D-intensive industries. On the other hand, new firms are more likely to exit through voluntary liquidation and merger in industries characterized by large amounts of capital and low price-cost margins. Region-specific characteristics, such as regional agglomeration and unemployment rate, have significant effects on the hazards of exit, and their effects vary across different forms of exit. Moreover, we provide evidence that firm-specific characteristics, such as the number of employees, and entrepreneur-specific characteristics, such as educational background and age, play significantly different roles in determining each form of exit.
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Ingrid Verheul AndrĂ© van Stel
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