Business Failure in UK and US Quoted Firms: Impact of Macroeconomic Instability and the Role of Legal Institutions

Arnab Bhattacharjee, Chris Higson, Sean Holly and Paul Kattuman

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: Firms exit through the mutually precluding events of bankruptcy and acquisition. We use a competing risks hazard regression model to identify the characteristics leading to each of these two outcomes using over thirty years of data on US and UK quoted firms. We find evidence about the way in which macroeconomic factors affect firm survival in these two economies, in addition to firm and industry-specific factors. Further, there are significant differences in the way in which firms in the US and the UK react to changes in the macroeconomic environment and, particularly to macroeconomic instability. We argue that these differences in response may be attributable to differences in bankruptcy codes in the US and the UK.

Keywords: Bankruptcy; Acquisitions; Macroeconomic Instability; Competing Risks Cox Proportional Hazards Model; Receivership (search for similar items in EconPapers)
JEL-codes: C41 E32 G33 K22 L16 (search for similar items in EconPapers)
Pages: 48
Date: 2004-03
New Economics Papers: this item is included in nep-cfn, nep-ent and nep-law
Note: MA
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:0420

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