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

Susanne Prantl

No 03-72, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

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.

Keywords: Exit; Bankruptcy; Voluntary Liquidation; Transition Economy; Duration Analysis (search for similar items in EconPapers)
JEL-codes: C14 C41 L20 P30 P52 (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:1682

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