The Impact of Initial Financial State on Firm Duration Across Entry Cohorts

29 Pages Posted: 7 Sep 2010

See all articles by Kim P. Huynh

Kim P. Huynh

Government of Canada - Bank of Canada; Indiana University Bloomington - Department of Economics

Robert J. Petrunia

Lakehead University - Department of Economics

Marcel C. Voia

Carleton University

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Abstract

Recent theories of industry dynamics emphasize the role of financial frictions in determining post entry performance of firms. Testing these theories has been difficult because of the lack of financial data on small, young and private firms. Using a unique data set, T2LEAP, this paper considers the survival of new firms in Canadian manufacturing from a financial perspective. Duration analysis quantifies the effects of firm, industry and aggregate factors. Findings show that nonlinear effects are found with firm leverage. Finally, likelihood decompositions offer insights into the contributing factors to firm hazard for nine entry cohorts during the period 1985–1997.

Suggested Citation

Huynh, Kim P. and Petrunia, Robert J. and Voia, Marcel C., The Impact of Initial Financial State on Firm Duration Across Entry Cohorts. The Journal of Industrial Economics, Vol. 58, No. 3, pp. 661-689, September 2010, Available at SSRN: https://ssrn.com/abstract=1672922 or http://dx.doi.org/10.1111/j.1467-6451.2010.00429.x

Kim P. Huynh (Contact Author)

Government of Canada - Bank of Canada ( email )

234 Wellington Street
Ontario, Ottawa K1A 0G9
Canada

Indiana University Bloomington - Department of Economics ( email )

Wylie Hall
Bloomington, IN 47405-6620
United States

Robert J. Petrunia

Lakehead University - Department of Economics ( email )

Thunder Bay, P7B 5E1
Canada

Marcel C. Voia

Carleton University ( email )

1125 colonel By Drive
Ottawa, Ontario K1S 5B6
Canada

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