 Lack of successors, firm default, and the performance of small businessesJapan and the World Economy, 2021, vol. 57, issue C Abstract: We investigate the effects of the lack of successors on small businesses with an elderly manager. Using firm-level data from Japan, a country with an aging population, we find the following results. First, smaller, younger, highly leveraged, and nongrowing firms are likely to have no successor. Second, firms with an elderly manager are more likely to exit and default if they have no successors, and this is particularly the case during the global financial crisis around 2009. This result suggests that these firms have less incentive to repay debts because they are not going concerns. As a result of the high probability of default, the annual change in bank borrowing is low if firms with an elderly manager have no successor. Third, the annual change of bank borrowing is lower for firms with no successor during the crisis and post-crisis periods, implying that banks reduce lending to these firms because of their high risk. Keywords: Successor; Small business; Firm default; Firm performance (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:japwor:v:57:y:2021:i:c:s0922142520300517 DOI: 10.1016/j.japwor.2020.101051 Access Statistics for this article Japan and the World Economy is currently edited by Robert Dekle and Yasushi Hamao More articles in Japan and the World Economy from Elsevier |
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