Institutional Quality and New Firm Survival
31 Pages Posted: 3 Jun 2017
Date Written: July 2017
The existing literature on firm survival focuses almost exclusively on firm‐ and industry‐level determinants. What is generally overlooked, albeit extremely important for firm survival in developing countries, is the impact of institutional quality. Using data from manufacturing firms in China for the 1998–2005 period, we find that institutional quality has a significant and positive impact on the survival of private enterprises. Specifically, a one‐standard‐deviation increase in the security of property rights protection leads to an 8.8 percent decrease in the hazard rate of private enterprises. Our results are robust to the inclusion of control variables and to various checks.
Keywords: New firm survival, institutional quality, private enterprises, China
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