Abstract

http://ssrn.com/abstract=1931723
 
 

References (35)



 
 

Citations (3)



 


 



How Does Personal Bankruptcy Law Affect Start-Ups?


Geraldo Cerqueiro


Catolica Lisbon School of Business and Economics

María Fabiana Penas


Tilburg University - CentER, EBC, and TILEC

September 21, 2011


Abstract:     
We analyze the effect of changes in U.S. state personal exemptions on the financing structure and performance of a representative sample of start-ups. An increase in the amount of borrower’s personal wealth protected in bankruptcy reduces the availability of bank credit to all start-ups. Owners of unlimited liability businesses, who benefit from the increase in wealth insurance, offset the reduction in bank credit by investing more money in the firm. We find no such response for start-ups whose entrepreneurs’ personal wealth is already protected by limited liability. Consequently, corporations experience lower growth rates and higher failure rates, while proprietorships performance is not negatively affected.

Number of Pages in PDF File: 37

Keywords: Debtor protection, bankruptcy, start-ups, credit availability, agency problems

JEL Classification: G32, G33, K35, M13

working papers series





Download This Paper

Date posted: September 23, 2011 ; Last revised: October 28, 2014

Suggested Citation

Cerqueiro, Geraldo and Penas, María Fabiana, How Does Personal Bankruptcy Law Affect Start-Ups? (September 21, 2011). Available at SSRN: http://ssrn.com/abstract=1931723 or http://dx.doi.org/10.2139/ssrn.1931723

Contact Information

Geraldo Cerqueiro
Catolica Lisbon School of Business and Economics ( email )
palma de Cima
Lisbon, 1649-023
Portugal
María Fabiana Penas (Contact Author)
Tilburg University - CentER, EBC, and TILEC ( email )
P.O. Box 90153
Tilburg, DC 5000 LE
Netherlands
Feedback to SSRN


Paper statistics
Abstract Views: 557
Downloads: 15
References:  35
Citations:  3
Paper comments
No comments have been made on this paper

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo2 in 0.296 seconds