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Legal Form, Growth and Exit of West German Firms—Empirical Results for Manufacturing, Construction, Trade and Service Industries
Author(s) -
Harhoff Dietmar,
Stahl Konrad,
Woywode Michaerl
Publication year - 1998
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/1467-6451.00083
Subject(s) - insolvency , bankruptcy , creditor , german , business , sample (material) , liability , service (business) , labour economics , finance , economics , debt , chemistry , archaeology , chromatography , marketing , history
Using a sample of approximately 11000 West German firms from all major sectors of the economy, we test predictions on the relationship between legal form, firm survival and employment growth. In our tests, we distinguish between voluntary liquidation without losses to creditors and bankruptcy, that is forced liquidation. We demonstrate that in all sectors firms under limited liability have higher growth and higher insolvency rates than comparable firms under full liability. Firms whose owners are approaching retirement age are characterised by relatively high hazards of voluntary liquidation, while the propensity to declare insolvency is not affected by the owner’s age.