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http://ssrn.com/abstract=1632716
 
 

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Bankruptcy Reform Act of 2005 and Entrepreneurial Activity


Yongwook Paik


University of Southern California - Marshall School of Business

June 30, 2010


Abstract:     
This paper investigates the effect of the bankruptcy reform act of 2005, formally known as the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), on entrepreneurial activity, measured by the likelihood of switching into self-employment. The analysis of this paper suggests that the probability of becoming self-employed with an unincorporated firm, regardless of firm size, declined after the bankruptcy reform act of 2005, and in this way entrepreneurial activity decreased. On the other hand, the probability of becoming self-employed with an incorporated firm was virtually unchanged by the revised bankruptcy law. However, the size of the incorporated firm makes a difference with small incorporated firms being different from medium- or large- incorporated firms. That is, the probability of becoming self-employed with a small incorporated firm declined after the bankruptcy reform act of 2005 in a similar manner to the probability of becoming self-employed with an unincorporated firm, but the probability of becoming self-employed with a medium- or large-size incorporated firm does not change significantly.

Number of Pages in PDF File: 40

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Date posted: July 1, 2010 ; Last revised: July 19, 2011

Suggested Citation

Paik, Yongwook, Bankruptcy Reform Act of 2005 and Entrepreneurial Activity (June 30, 2010). Available at SSRN: http://ssrn.com/abstract=1632716 or http://dx.doi.org/10.2139/ssrn.1632716

Contact Information

Yongwook Paik (Contact Author)
University of Southern California - Marshall School of Business ( email )
701 Exposition Blvd
Los Angeles, CA 90089
United States

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