Tenancy by the Entirety and the Value of Wealth Insurance for Entrepreneurs

Jeffrey Traczynski ()
Additional contact information
Jeffrey Traczynski: Federal Deposit Insurance Corporation

No 13173, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper explores the willingness of entrepreneurs to pay for wealth insurance to protect personal assets in case of business failure and the impact of this strategy on small business operation decisions. I show that antidiscrimination laws allow married firm owners in half of U.S. states to choose between asset protection and having more collateral for business funding, allowing entrepreneurs to reveal their valuation for preserving personal assets at time of failure. I find that firm owners value asset protection offered by tenancy by the entirety laws at $900-$1000 per year. Firms receive smaller loans when entrepreneurs use this form of ownership to reduce the personal costs of firm failure, but show no differences in hiring patterns or spending on risky projects. This strategy of preparation in case of failure appears to affect small businesses through the funding channel.

Keywords: personal bankruptcy; tenancy by the entirety; revealed preference; entrepreneurship (search for similar items in EconPapers)
JEL-codes: K35 K36 L26 M13 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2020-04
New Economics Papers: this item is included in nep-cfn, nep-ent, nep-ias, nep-law and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published - published in: Journal of Law, Finance and Accounting, 2020, 5 (2), 337 - 359

Downloads: (external link)
https://docs.iza.org/dp13173.pdf (application/pdf)

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:iza:izadps:dp13173

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().