The Determinants of Compulsory Liquidation in the U.K

Keith Cuthbertson and John Hudson

The Manchester School of Economic & Social Studies, 1996, vol. 64, issue 3, 298-308

Abstract: Compulsory liquidations in the United Kingdom are found to depend on profit margins, the age distribution of new firms and the change in income gearing. The results are consistent with a model where the probability of insolvency increases with a squeeze on real profits which may be caused by higher real unit labour costs or rises in real material's input costs. An increase in income gearing on outstanding debt increases the probability that creditors will institute insolvency proceedings and 'bad luck' is found to be a cause of some liquidations of newly established firms. The empirical results imply that government macroeconomic policy can have a strong influence on liquidations via changes in income gearing and changes in profitability over the economic cycle. Copyright 1996 by Blackwell Publishers Ltd and The Victoria University of Manchester

Date: 1996
References: Add references at CitEc
Citations: View citations in EconPapers (8)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:manch2:v:64:y:1996:i:3:p:298-308

Access Statistics for this article

More articles in The Manchester School of Economic & Social Studies from University of Manchester Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().