Entrepreneurship and Information on Past Failures: A Natural Experiment

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

Multiple version iconThere are 2 versions of this paper

Date Written: May 25, 2020


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 ( email )


Mattia Girotti (Contact Author)

Banque de France ( email )


Augustin Landier

HEC ( email )

+33630006051 (Phone)

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

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