How do bankruptcy laws affect entrepreneurship development around the world?

Seung-Hyun Lee, Yasuhiro Yamakawa, Mike W. Peng and Jay B. Barney

Journal of Business Venturing, 2011, vol. 26, issue 5, 505-520

Abstract: How do bankruptcy laws as formal institutions affect entrepreneurship development around the world? Do entrepreneur-friendly bankruptcy laws encourage more entrepreneurship development at a societal level? We posit that if bankrupt entrepreneurs are excessively punished for failure, they may give up potentially high-return but inherently high-risk opportunities to start new businesses. Amassing a cross-country database from 29 countries spanning 19Â years (1990-2008), we find that lenient, entrepreneur-friendly bankruptcy laws are significantly correlated with the level of entrepreneurship development as measured by the rate of new firm entry.

Keywords: Bankruptcy; laws; Entrepreneurship; Institutions; Institution-based; view (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (105)

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