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Measuring the Effect of Bankruptcy Laws on Entrepreneurship Across Countries

Douglas J. Cumming

York University - Schulich School of Business

December 8, 2011

Journal of Entrepreneurial Finance, Forthcoming

Two recent papers examine the impact of corporate bankruptcy laws on new business start-ups in 29 countries over 1990 - 2008 (Peng et al., 2010; Lee et al., 2010). In this commentary, I briefly point out two significant issues which future researchers might want to consider. First, several countries in the data examined had changed their personal and corporate bankruptcy laws over the years studied. It is statistically inappropriate and inaccurate to treat bankruptcy laws as time invariant, as in Peng et al. (2010) and Lee et al. (2010), particularly in view of the dramatic changes in bankruptcy laws over time in so many countries. Second, Peng et al. (2010) and Lee et al. (2010) have a misplaced focus on corporate bankruptcy law while ignoring personal bankruptcy law. This focus is at odds with theory and prior work on topic which relates entrepreneurship to personal bankruptcy law.

Number of Pages in PDF File: 8

Keywords: Bankruptcy Law, Entrepreneurship

JEL Classification: G33, K35, M13

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Date posted: December 10, 2011  

Suggested Citation

Cumming, Douglas J., Measuring the Effect of Bankruptcy Laws on Entrepreneurship Across Countries (December 8, 2011). Journal of Entrepreneurial Finance, Forthcoming. Available at SSRN: http://ssrn.com/abstract=1970042

Contact Information

Douglas J. Cumming (Contact Author)
York University - Schulich School of Business ( email )
4700 Keele Street
Toronto, Ontario M3J 1P3
HOME PAGE: http://booksite.elsevier.com/9780124095373/
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