Entrepreneurship and Information on Past Failures: A Natural Experiment

62 Pages Posted: 18 Jul 2017 Last revised: 26 May 2020

See all articles by Christophe Cahn

Christophe Cahn

Banque de France - Direction des Entreprises

Mattia Girotti

Banque de France

Augustin Landier

HEC

Multiple version iconThere are 2 versions of this paper

Date Written: May 25, 2020

Abstract

We analyze how public information on past entrepreneurial failure affects entrepreneurs' ability to borrow and start new ventures. We exploit a policy shock from 2013 in France, which eliminated a widely used means of public reporting to banks of the identity of entrepreneurs involved in past corporate liquidations. We find that the elimination of this flag increases failed entrepreneurs' probability of starting a new business by at least 19%. Restarters create companies that have a higher probability of default. The effect of the reform is significantly more pronounced for younger entrepreneurs, in line with banks rationally using information to update beliefs on entrepreneurs' ability.

Keywords: Entrepreneurship, Access to credit, Bankruptcy

JEL Classification: G33, L26

Suggested Citation

Cahn, Christophe and Girotti, Mattia and Landier, Augustin, Entrepreneurship and Information on Past Failures: A Natural Experiment (May 25, 2020). Available at SSRN: https://ssrn.com/abstract=3000829 or http://dx.doi.org/10.2139/ssrn.3000829

Christophe Cahn

Banque de France - Direction des Entreprises ( email )

39 rue Croix des Petits Champs
Paris Cedex 01 75049
France

Mattia Girotti (Contact Author)

Banque de France ( email )

Paris
France

Augustin Landier

HEC ( email )

France
+33630006051 (Phone)

HOME PAGE: http://https://sites.google.com/site/augustinlandier/

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
167
Abstract Views
1,467
rank
169,907
PlumX Metrics