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

39 Pages Posted: 2 Mar 2007 Last revised: 18 Jul 2009

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

Multiple version iconThere are 2 versions of this paper

Date Written: May 25, 2009

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 firm 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.

Keywords: firm exit, duration, leverage, entry cohort

JEL Classification: L11, L60, C41, D92

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 (May 25, 2009). Available at SSRN: https://ssrn.com/abstract=966242 or http://dx.doi.org/10.2139/ssrn.966242

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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