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Duration of new firms: The role of startup financial conditions, industry and aggregate factors

Kim Huynh (), Robert Petrunia () and Marcel Voia

Structural Change and Economic Dynamics, 2012, vol. 23, issue 4, 354-362

Abstract: This paper documents the relative importance of firm, industry and aggregate factors on the post-entry performance of new firms. This study utilizes a unique administrative dataset, T2LEAP, which contains employment and balance sheet information for all incorporated Canadian firms. The data allow us to include financial variables such as the debt-to-asset ratio (leverage) and document their impact on firm survival. We perform duration analysis on all the entrant manufacturing firms during the period 1985–1996. In addition to leverage, we find that: firm characteristics such as size and labour productivity; industry conditions, such as the real exchange rate, the difference in the US–Canada tariff rates, entry penetration, and the capital–labour ratio; and aggregate conditions in terms of the yield gap also play a role in the survival prospects of new firms.

Keywords: Firm survival; Financial leverage; Productivity; Duration models (search for similar items in EconPapers)
JEL-codes: C41 C14 D21 L60 (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:23:y:2012:i:4:p:354-362

DOI: 10.1016/j.strueco.2012.03.008

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