competition and entrepreneurs human capital in small business longevity and growth abstract an analysis of data on a sample of small scale manufacturers shows that a business is less likely to survive and grows slower the smaller the average price cost margin in the industry in which it operates the probability of survival is also smaller in import competing industries so is the mean growth rate among survivors we interpret this as evidence that small businesses are less likely to survive and grow slower in industries where the pressure of competition is stronger given competitive pressure and establishment characteristics the probability of business survival and the expected growth rate conditional on survival both increase with entrepreneurial human capital this is in the sense that the probability of business survival increases with the number of years of schooling and the number of years of business experience of the entrepreneur as does the expected growth rate conditional on survival these results are consistent with another finding that unobservable influences on business

measuring the default risk of small business loans a survival analysis approach in this paper we report that although medium maturity loans originated under the sba 7 a loan guarantee program are targeted to small firms that fail to obtain credit through conventional channels the default experience is comparable to that of a large percentage of loans held by larger commercial banks we establish that the default behavior of these loans is time sensitive as a loan seasons the likelihood of default increases initially peaks in the second year and declines thereafter using a discrete time hazard framework we show that the likelihood of default is conditional on borrower lender and loan characteristics and changes in economic conditions

the energy efficiency paradox revisited through a partial observability approach the present paper examines the energy efficiency paradox demonstrated in greek manufacturing firms through a partial observability approach the data set used has resulted from a survey carried out among 161 energy saving technology firm adopters maximum likelihood estimates that arise from an incidental truncation model reveal that the adoption of the energy saving technologies is indeed strongly correlated to the returns of assets that are required in order to undertake the corresponding investments the source of the energy efficiency paradox lies within a wide range of factors policy schemes that aim to increase the adoption rate of energy saving technologies within the field of manufacturing are significantly affected by differences in the size of firms finally mixed policies seem to be more effective than policies that are only capital subsidy or regulation oriented

early and late calls of convertible bonds theory and evidence many convertible bonds are called too early or too late relative to the perfect markets decision rule of ingersoll 1977a and ingersoll 1977b we re examine the convertible call decision under corporate taxation and possible default prior to maturity our model predicts that early calls will be associated with high coupon and low call premium dividend income volatility tax rate and interest rate and late calls will be associated with high call premium dividend income tax rate and interest rate and low coupon and volatility these implications are supported by empirical tests carried out with five years of convertible call data

on the relationship between firm size and export intensity export marketing literature supports the view that firm size is positively related to export intensity although the empirical findings have been mixed a number of theoretical arguments are used to support this proposition i e international marketing economies of scale limited managerial and financial resources of small firms decisionmaker s risk perception based on a large survey of the italian manufacturing industry the article falsifies the proposition and challenges some widely held assumptions in export marketing literature

the small the young and the productive determinants of manufacturing firm growth in ethiopia abstract this study examines the relationships between firm growth and firm size age and labor productivity using annual census based panel data on ethiopian manufacturing firms the study explicitly addresses the ongoing statistical concerns in firm growth models such as sample censoring regression to the mean and unobserved heterogeneity our empirical results indicate that firm growth decreases with size smaller firms have faster rates of growth than larger firms even after compensating for their higher attrition rates the negative relation between age and growth predicted by the learning model is found to apply only to younger firms labor productivity affects firm growth positively which indicates that there is a market selection process at work during the period of economic reforms in ethiopia

age size growth and survival uk companies in the 1980s this paper examines growth and survival amongst quoted and unquoted u k companies in the period 1975 85 and compares the results with earlier u k and u s studies an examination of death rates shows that smaller companies had higher death rates but the largest and smallest companies were least vulnerable to takeover careful attention is therefore paid to problems of sample selection bias it is shown that smaller companies grew faster than larger companies that gibrat s law does not hold amongst smaller firms that age is negatively related to growth and that these results are not an artifact of sample selection bias copyright 1994 by blackwell publishing ltd

exchange rate volatility and us hong kong industry trade is there evidence of a third country effect in an effort to better understand the determinants of trade flows worldwide researchers have recently incorporated external volatility in addition to that of the partners bilateral exchange rate into their models the so called third country effect is present if adding this term changes the bilateral volatility estimates that are found when external volatility is omitted this study examines us exports to hong kong for 143 industries and imports from hong kong for 110 industries and finds two key results first expected inflation due to hong kong s dollar peg leads to increased us exports in a large number of industries second comparing our results with those of a previous study shows strong evidence of a third country effect especially for us imports nonparametric tests suggest that these effects differ by sector for both exports and imports manufacturing industries that enjoy a large trade share are less likely to experience this effect once external volatility is incorporated into the

the growth of us credit unions abstract the growth of us credit unions during the 1990s is investigated empirically using univariate and multivariate cross sectional and panel estimation techniques univariate tests of the law of proportionate effect suggest that in general large credit unions grew faster than their smaller counterparts on average credit unions with above average growth in one period tended to experience below average growth in the next smaller credit unions tended to have more variable growth than large ones while credit unions share a common co operative philosophy they differ in terms of age profile scope for membership growth charter type and financial structure and performance in estimations of a multivariate growth model most of these characteristics are found to have a significant influence on the size growth relationship while large state chartered credit unions grew faster than their smaller counterparts the reverse was true for federally chartered credit unions in general if larger credit unions grew faster than smaller ones they tended to do so for specific reasons because their charters were less restrictive because they were more efficient or because they had a financial structure that was more conducive to growth therefore credit union growth was not random but highly systematic

the cross sectional dynamics of the us business cycle 1950 1999 abstract modern interest in business cycles has focussed on the co movements and correlations in the major macroeconomic aggregates in this paper we offer another dimension to business cycle analysis which looks at the time series of cross sectional distributions of the growth rates of sales by us quoted companies from 1950 to 1999 we detect correlations between aggregate business cycle fluctuations and the higher moments of the cross sectional distribution we find a significant negative correlation between the rate of growth of gdp and the cross sectional variance and skewness of growth rates of sales on the other hand there is positive correlation at business cycle frequencies with kurtosis in order to explore this further we turn to the dynamic evolution of firms and analyse the sensitivity of growth rates to aggregate shocks conditioning on firm size the results suggest that despite considerable heterogeneity macroeconomic shocks have pervasive effects that are however more pronounced for firms in the middle range of growth this has implications for both macro and industrial economics

potential entrepreneurship in japan the aim of this paper is to investigate the potential for entrepreneurship in japan using the employment status survey which is the only government administered survey that includes questions about the desire to become an entrepreneur we find that there are still a number of potential entrepreneurs in japan despite a recent decline in the number of new firms being established we also find that there is a large regional variation in the distribution of entrepreneurial potential with clustering into a few regions and the level in tokyo being exceptional further using panel data on 47 prefectures from 1982 to 1997 we examine the determinants of entrepreneurial potential the estimation results show that the price cost margin market size market growth and the unemployment rate have positive effects on the potential for entrepreneurship

seller concentration the technological explanation and demand uncertainty the level of seller concentration in an industry depends on two characteristics of the size distribution of the firms concerned their number and the inequality of their sizes acknowledging these two dimensions the aim of this paper is to construct a unified theoretical framework capable of shedding some light on the economic forces which determine the degree of concentration it builds on the analysis of two schools of thought within the existing literature the first of these we shall label the technological explanation of concentration since it emphasises the role of the cost curve in particular the minimum efficient scale of production and barriers to the entry of new firms implicitly this attaches most importance to the firm number component of concentration the second school includes the various stochastic models of firm growth these models have demonstrated the influence on concentration of what is sometimes called luck or more deterministically those factors which might influence the spread of growth rates of firms within an industry to that extent these models emphasise the other component of concentration size inequalities we see our present contribution as an attempt to build a bridge between these two approaches we develop the well known simon and bonini i958 stochastic growth model in such a way as to provide a formal statement of the technological explanation and then discuss various ways of deepening the economic content of their original contribution section i provides a brief resume of the technological explanation and section ii describes the salient features of the simon and bonini model it goes on to show how this model can be used to disentangle a mathematical relationship between the concentration ratio and i minimum efficient scale ii the share of sub optimal firms and iii the degree of firm size inequalities this relationship is tested with some success using i968 uk census data an important conclusion of the simon and bonini model is that firm size inequalities depend crucially on the probability of entry by new firms section iii considers how this proposition may be invested with more economic content the discussion is couched at a fairly general level but in the appendix we suggest a specific model which explains entry as a consequence of the fact that incumbent firms typically operate in a world of demand uncertainty where entry deterrence may be too costly it provides specific economic predictions

the economics of organization the transaction cost approach the transaction cost approach to the study of economic organization regards the transaction as the basic unit of analysis and holds that an understanding of transaction cost economizing is central to the study of organizations applications of this approach require that transactions be dimensionalized and that alternative governance structures be described economizing is accomplished by assigning transactions to governance structures in a discriminating way the approach applies both to the determination of efficient boundaries as between firms and markets and to the organization of internal transactions including the design of employment relations the approach is compared and contrasted with selected parts of the organization theory literature

works councils and employment growth in german establishments using data from german manufacturing establishments this article examines the relationship between works councils and employment growth taking the endogeneity of councils into account the estimates show a positive growth effect of works councils this suggests that the performance enhancing voice role of german works councils dominates their monopoly role moreover the findings of this study support the hypothesis that workers are more likely to implement a council to protect their quasi rents when the establishment is facing a long term crisis copyright the author 2009 published by oxford university press on behalf of the cambridge political economy society all rights reserved oxford university press

racial and gender discrimination in the micro firms credit market evidence from trinidad and tobago this paper examines the market for loans from banks to micro and small enterprises in trinidad and tobago it tests for the presence of racial and gender discrimination it takes the reported refusal to grant loans to groups when all other indicators of credit worthiness are taken into account as evidence of discrimination the paper distinguishes between application and denial rates it finds that once all other indicators of credit worthiness are taken into account neither application nor denial rates differ significantly by gender reported denial rates are however higher for africans compared with other ethnic groups implying the possible presence of discrimination

learning and the sources of corporate growth this paper explores the link between learning and corporate growth by developing different models of learning and showing that they produce observably different models of corporate growth using data on the growth of a number of firms in the us automobile industry during the 20th century we compare these different models of growth in an effort to identify the major sources of learning which these firms seem to have relied on although there are interesting differences between growth processes before and after the second world war the basic conclusion that we are drawn to is that learning in this sector is largely unsystematic and opportunistic

farm growth and survival econometric evidence for individual farms in upper austria this article investigates survival and growth of more than 50 000 upper austrian farm households within a maximum likelihood sample selection framework the results suggest that age schooling and sex of the farm operator size of the farm family and off farm employment status as well as initial farm size significantly influence farm growth and survival the present study provides support for the notion of a disappearing middle in the size distribution the process of polarization is closely related to the off farm employment status of farms correcting for sample attrition bias is important when analyzing the performance of part time farms

the j curve in the emerging economies of eastern europe devaluation or depreciation of a currency worsens the trade balance before improving it resulting in a j curve pattern a new definition of the hypothesis implies a short run deterioration combined with the long run improvement by using monthly data over the january 1990 june 2005 period from 11 east european emerging economies most of which are the new european union eu members or the eu candidate countries this article uses the bounds testing approach to cointegration and error correction modelling and finds empirical support for the j curve hypothesis in three countries of bulgaria croatia and russia the results have important implications for policymakers involved in economics in terms of using exchange rate policy as a policy device to achieve real convergence toward eu standards

the resolution of financial distress most models of financial structure embody an assumption about financial distress that causes debt to be costly to the issuing firm this approach has been criticized on the grounds that the assumed costs could be avoided by a costless financial reorganization in this article we show that despite the possibility of costless reorganization it may be rational for firms to incur significant costs in the resolution of financial distress the main assumptions that give rise to our results are the existence of asymmetric courts to impose a reorganization on the claimants of a firm article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

economic failure and the role of plant age and size this paper introduces a large scale administrative panel data set on corporate bankruptcy in germany that allows for an econometric analysis of involuntary exits where previous studies mixed voluntary and involuntary exits approximately 83 of all bankruptcies occur in plants with not more than 10 employees and 61 of all bankrupt plants are not older than 5 years the descriptive statistics and regression analysis indicate substantial negative age dependence with respect to bankruptcy risk but confirm negative size dependence for mature plants only our results corroborate hypotheses stressing increasing capabilities and positional advantage both predicting negative age dependence with respect to bankruptcy risk due to productivity improvements the results are not consistent with the theories explaining age dependence via imprinting or structural inertia

recent trends in aggregate concentration in the united kingdom economy the extent to which large corporations dominate economic activity and the design of ap propriate policies towards them have been the subject of an extensive debate in the uk in recent years trends in concentration in manufacturing have played an important role in fuelling this debate recent studies however suggest that the unprecedented increases in overall or aggregate concentration in manufacturing which took place in the 1960s have not been repeated in the 1970s on the contrary concentration seems to have stabilised or fallen in the first half of the 1970s 1 in our view such estimates are not necessarily a good guide to the size and role of big business in the economy as a whole the discussion needs to be extended beyond the confines of manufacturing non manufacturing activity in the uk in the 1970s accounted for around 70 of gdp and over two thirds of employ ment 2 many of the largest uk companies including the oil companies the clearing banks and insurers and major retailers operate principally outside manufacturing and many of those within manufacturing have substantial non manufacturing interests as their consoli dated annual accounts reveal 3 mergers provide a more dramatic indication of this pattern in 1983 bat industries one of the ten largest industrial companies in the uk made a takeover bid for eagle star the sixth largest insurer whilst this may be an extreme example it is certainly the case that in the 1970s conglomerate mergers have generally become of far greater relative importance than they were in the 1960s 4 our object in this paper is therefore to provide recent estimates of aggregate concen tration which extend beyond manufacturing industry and cover the years 1968 82 this involves major problems because there are no official statistics to guide us we have there fore had to use a variety of published sources principally based on company accounts

business failure of new firms an empirical analysis using a multiplicative hazards model abstract this paper investigates business failure of new firms using a multiplicative hazards model we estimate the determinants of business failure among new manufacturing firms in tokyo during the period 1986 to 1994 it is found that a new firm without sufficient capital or a sufficient size has a higher risk of business failure it is also found that the new firm tends to have more difficulty surviving in an industry characterized by a high entry rate with respect to the timing of entry the new firm that entered just before or after the collapse of the so called bubble economy has been more likely to fail furthermore we estimate a regression model based not only on age but also on calendar time by using a regression model based on calendar time it is found that the firm s age has been related to business failure

the relationship between firm growth size and age estimates for 100 manufacturing industries this study uses a sample of all firms operating in 100 manufacturing industries to examine some aspects of firm dynamics it finds that firm growth the variability of firm growth and the probability that a firm will fail decrease with firm age it also finds that firm growth decreases at a diminishing rate with firm size even after controlling for the exit of slow growing firms from the sample gibrat s law therefore fails although the severity of the failure decreases with firm size copyright 1987 by blackwell publishing ltd

on growth drivers of high tech start ups exploring the role of founders human capital and venture capital abstract in this paper we jointly analyze the effects of the human capital of founders and access to venture capital vc financing on the growth of 439 italian new technology based firms ntbfs we rely on econometric models that control for survivorship bias and the endogeneity of vc financing as to non vc backed firms the competence based argument that the capabilities of ntbfs coincide with founders skills is confirmed nonetheless once a ntbf obtains vc this coincidence vanishes pointing to the coach function performed by vc investors conversely the view that sees the scout function as the main task performed by vc investors is not supported

how sensitive are malaysia s bilateral trade flows to depreciation in an attempt to assess the impact of currency depreciation on the trade balance recent studies are employing disaggregated trade data to avoid aggregation bias however since import and export prices are not available at disaggregated level recent studies are using export and import values rather than their volumes so that they can establish direct relation between inpayments and the exchange rate as well as between outpayments and the exchange rate this study explores the experience of malaysia bilateral inpayments and outpayments models are estimated between malaysia and her 14 trading partners using quarterly data and bound testing approach to cointegration the results show that while real depreciation of the ringgit has short run effects in the long run it increases malaysia s inpayments from only five trading partners

determinants and costs of current account reversals under heterogeneity and serial correlation using large panel data sets for analysis of determinants and costs of reversals asks for controls of latent heterogeneity among countries this article performs a bayesian analysis which allows for a parsimonious yet flexible handling of country specific heterogeneity via random coefficients and serially correlated errors consideration of persistence within the employed macroeconomic data is important to gauge the impact of explaining variables suggested by theory correctly bayesian specification tests provide evidence in favour of models incorporating heterogeneity and serial correlation the results suggest that costs of reversals are overestimated when country specific heterogeneity is neglected and stress the importance of external variables in explaining current account reversals results are checked for robustness against the underlying reversal definition

the information content of bankruptcy filing on securityholders of the bankrupt firm an empirical investigation this paper captures the information content of bankruptcy announcements on stockholders and three different classes of debtholders using daily excess returns significant negative stock price reaction to the filing announcement is documented more interestingly the secured debtholders are unaffected by the announcement however the unsecured and the convertible debt classes exhibit significant adverse price reaction during the event period the secured debt group gains significantly while all other classes experience substantial losses cross sectional analysis reveals that the complexity of the reorganization process the security of the debt issue and to some degree the anticipation of the bankruptcy filing are important determinants of bond excess returns it is also found that leverage plays a significant role in preserving firm value by forcing the firm to confront reorganization sooner

the j curve and nafta evidence from commodity trade between the us and mexico the north american free trade agreement nafta was predicted to have a substantial impact on the us mexico trade especially on specific importing and exporting industries in this article we use annual industry level export and import data from 1962 to 2004 to discern both the short and long run effects of real exchange rate depreciation on the mexico us trade balance as well as the effects of nafta on this trade we find that peso depreciation has a positive long run effect on 24 of 102 mexican industries and a negative short run effect on 19 of 102 industries only a small fraction 7 of 102 industries show any support for the j curve hypothesis nafta has had a significant effect on a significant number of the industries however

inverted u relationship between r d intensity and survival evidence on scale and complementarity effects in uk data existing evidence on the relationship between rd ii rd and iii creative destruction as proxied by median r d intensity in the industry and the premium on business lending have negative effects on firm survival other findings concerning age size productivity relative growth pavitt technology classes and the macroeconomic environment are in line with the existing literature the results are strongly or moderately robust to different samples stepwise estimations and controls for frailty and left truncation

how sensitive is commodity trade flows between us and india to currency depreciation previous studies that investigated the impact of real depreciation of the rupee on indian trade balance used aggregate trade data and provided no support for real depreciation to be effective in improving india s trade balance in this article we disaggregate the indian trade data by commodity and consider the sensitivity of each industry s inpayments export value and outpayments import value to real rupee dollar exchange rate annual data over the period of 1962 to 2004 from 40 industries that trade between the two countries as well as bounds testing approach are used to show that while in half of the industries real depreciation of rupee has short run effects on inpayments and outpayments the short run effects do not last into the long run in majority of the cases

entrepreneurial growth the role of international knowledge acquisition as moderated by firm age in line with repeated recent calls for research on specific forms of growth rather than on an undifferentiated notion of total growth our study contributes to the understanding of entrepreneurial growth by this we mean growth through expansion into new geographic markets and or via the introduction of new products or services building on penrose s theory of the growth of the firm and on the research streams she has in part inspired we investigate the impact of knowledge acquisition from international markets on entrepreneurial growth both at home and abroad we further suggest that the effects of international knowledge acquisition on entrepreneurial growth will vary with firm age utilizing longitudinal data on 138 small and medium sized enterprises smes we find that the acquisition of knowledge from international markets fuels growth through market development and that this effect is stronger for international expansion than domestic expansion our results also show that firm age negatively moderates the relationship between international knowledge acquisition and entrepreneurial growth via the introduction of new products or services specifically international knowledge acquisition has a positive effect on growth via new products services development in young firms but a negative effect in mature firms we assume this reflects changes over time in how international knowledge is managed

are devaluations contractionary in mena countries currency depreciation reduces aggregate supply by raising cost of imported inputs and increases aggregate demand by increasing its net export component depending on the relative strength of the two effects depreciation could be expansionary or contractionary we employ the bounds testing approach to cointegration and error correction modelling to evaluate the effects of exchange rate depreciation on output growth both in the short and in the long run across a sample of mena countries exchange rate fluctuations are found to be important to fluctuations in real output growth in the short run anticipated exchange rate depreciation may induce long run expansionary or contractionary effects on output supply consistent with theory s predictions the expansionary effect of unanticipated depreciation is only transitory on output growth nonetheless unanticipated depreciation is found to have a contractionary effect on output growth in the long run via an increase in the cost of imported inputs

age order of entry strategic orientation and organizational performance abstract this paper proposes an empirical test of several hypotheses linking age order of entry and strategic orientations to a firm s performance three strategies are defined cost leadership strategy innovative differentiation and marketing differentiation the aim is to show that the impact on performance of both age and each of the three strategic orientations may differ according to a firm s order of entry into an industry following lieberman and montgomery s 1998 evaluation of their major contribution on first mover advantage we emphasize three points first we develop and test hypotheses related to early and late followers strategic orientations broadening the scope of traditional studies on pioneers second the model combines the dimensions of a firm s age order of entry and strategic orientations as well as industry conditions stage of the industry environmental unpredictability and technology diffusion to establish a contingent model of performance analysis finally the empirical study deals chiefly with organizational performance and not market share which is considered a typical advantage accruing to pioneers in addition the scope of the study 582 french manufacturing firms provides the means to fill a void in empirical studies because it is a broad cross sectional test on non u s data the firms are mainly private small to medium sized and single or dominant business firms therefore our assumptions must be understood as particularly applicable to this type of firm the results reveal important lessons for practitioners first we did not find a first mover advantage in terms of organizational performance in addition pioneers organizational performance is enhanced by the cost leader strategy contrary to our assumption emphasizing innovative differentiation for these firms second early followers performance benefits from innovative differentiation and marketing differentiation finally late entrants developing a cost leader strategy have a significantly higher performance all groups considered late followers are the firms most sensitive to environmental uncertainty and age effects our study clarifies the impact of a firm s age and strategic orientations on its performance depending on the firm s order of entry the implications of these results are particularly relevant for practitioners and entrepreneurs first a cost leadership strategy seems to be a guarantee for a pioneer to increase its organizational performance new ventures should therefore take into consideration the fact that newness and innovative differentiation might not be the best strategic orientations for high performance in the long run second as a second mover however developing a superior product and being able to market it efficiently appear to be the enhancing factors of firm performance third for both pioneers and early followers age does not significantly reduce their performance however the longer a firm waits before entering the greater is the negative effect of age on its performance this is due to the difficulty of resisting competitive erosion because pioneers and early followers drive the changes in the industry the identification of these effects should help managers and stakeholders to make more effective entry decisions to sustain a firm s advantage leading to better performance and higher probability of survival

spatial agglomeration and firm exit a spatial dynamic analysis for italian provinces the paper investigates the effect of spatial agglomeration on firm exit in a dynamic framework using a large dataset at the industry province level for italy 1998 2007 we estimate a spatial dynamic panel model via a gmm estimator and analyze the short run impact of specialization and variety on firm exit specialization negatively affects firm exit rates in the short run the effect is particularly significant for low tech firms the impact of variety on firm mortality rates at the industry level is instead less clear although still negative and significant for low tech firms

the survival of new plants start up conditions and post entry evolution abstract this paper examines the longevity of entrants we find size to be an important determinant of the chances of survival this being particularly relevant to de novo entrants as compared with entry by established firms current size is also found to be a better predictor of failure than initial size moreover our findings indicate that after controlling for size differences past growth matters for survival suggesting a partial adjustment process for firm size in the post entry period finally new plants are more likely to live longer if they enter growing industries or industries with little entry activity

sources of gains to shareholders from bankruptcy resolution abstract using a logistic regression model we identify the characteristics of firms whose shareholders are likely to benefit from bankruptcy resolution that is winners losers are firms whose shareholders experience positive negative excess returns after bankruptcy filing we find that winners are relatively smaller firms with higher proportions of convertible debt tend to file for bankruptcy for strategic reasons have low share ownership concentration and suffer comparatively larger pre filing stock price declines among winners shareholder returns are greater for firms that have higher levels of private debt and research and development r d expenditures and operate in more concentrated industries in addition our analysis indicates that an ex ante trading strategy of purchasing bankrupt stocks with a greater than 50 probability of being a winner on the day after bankruptcy filing and holding the stocks for a year on an average can generate average compounded and excess compounded holding period returns of 71 and 42 respectively

the j curve malaysia versus her major trading partners currency depreciation is said to worsen the trade balance before improving it hence the j curve phenomenon since introduction of cointegration and error correction modelling researchers have tried to distinguish the short run effects of currency depreciation from its long run effects a few studies that have investigated the experience of malaysia have relied upon aggregate trade data and have found no strong support for a significant relation between the real value of the ringgit and the malaysian trade balance in this article we disaggregate the data by country and consider malaysia s bilateral trade balance with her 14 largest trading partners using bound testing approach to cointegration and error correction modelling we provide some support for the j curve hypothesis

determinants of united states trade balance with australia this study explores the determinants of the usa s trade balance ne with australia and tests for long run relationships regression results suggest the most important determinant of ne is the price ratio usa relative to australia followed by the lending rate ratio gdp ratio money supply ratio and the real exchange rate which together explain 93 of the variation in ne f tests suggest ne responds to rising and falling exchange rate regimes symmetrically johansen s cointegration test suggests a significant at 1 long run relationship between ne and its determinants based on engle granger import share is and output growth q are cointegrated at 10 if q shocks precede is shocks suggesting a weak long run relationship between them there is a positive long run relationship between ne and the exchange rate er at 5 if er shocks precede ne shocks results based on the error correction model suggest a positive relationship between expected er and ne and reinforce the cointegration results

persistence survival and growth a closer look at 20 years of fast growing firms in austria for survival persistence and growth hifs show a much higher persistence than hgfs the average growth rate after the high growth episode is quite modest for both hifs and hgfs policy implications of the ndings are discussed

an explanation of the life span of new french firms in contrast to previous studies on firm survival which tend to focus on features related to the structure of the firms and their area of activity our aim here is to widen the perspective usually adopted in the field taking into account a larger and more qualitative set of variables among these variables features related to the individual characteristics of the entrepreneur to the context of entrepreneurship and to the insertion in entrepreneurial networks are significant to explain the life span of new firms the empirical material is drawn from two surveys which provide detailed data about a group of new firms created in france in 1994 and closed down before 1997 or still running in 1997 our empirical approach on qualitative data is based on data analysis methods linear discriminant analysis barycentric discriminant analysis analysis of variance according to the characteristics of the entrepreneur the main explanatory factors for the survival of new firms are the fact that they are entrepreneurs who have taken over firms that they have acquired during their previous occupational activity an experience in the same branch of activity and that they experience a successful integration into the entrepreneurial networks these three factors show that the survival of young firms is indirectly conditioned by the existence of an initial custom by the mastery of a job and by the know how in the entrepreneurial function

effect of credit guarantee policy on survival and performance of smes in republic of korea this study evaluates the effect of credit guarantee on smes at the firm level to estimate the effect of credit guarantee we analyze relations between credit guarantee the survival of guaranteed firms and their productive performance the result indicates that credit guarantee frequency enabled guaranteed firms to achieve good performances in general on the contrary the effect of guarantee amounts is ambiguous in that there is difference between the contemporary effect and the lagged effect therefore we conclude that credit guarantee satisfied partially its goal to alleviate smes difficulty in acquiring finance and to stabilize employment

stability of the money demand function in asian developing countries previous studies that estimated the money demand function in asian developing countries either employed traditional estimation techniques or recently popularized cointegration technique while the first group suffers from spurious regression problems the second group interpreted their finding of cointegration as a sign of stability of estimated parameters this study after incorporating the cusum and cusumsq tests into cointegration analysis shows that in some asian countries even though real m1 or m2 monetary aggregates are cointegrated with their determinants the estimated parameters are unstable

organic farming in scandinavia productivity and market exit abstract this paper attempts to quantitatively measure the change in the productivity of danish organic farming in recent years based on a translog production frontier framework the technical and scale efficiency at farm level is analysed by following a time trends as well as a general index model specification further this study tries to analyse the significance of subsidies for promoting long term growth in organic production by estimating a bootstrapped bivariate probit model with respect to factors influencing the probability of organic market exit the results revealed significant differences in the organic farms technical efficiencies no significant total factor productivity growth and even a slightly negative rate of technical change in the period investigated evidence has been found for a positive relationship between subsidy payments and an increase in farm efficiency technology improvements and a decreasing probability of organic market exit which was also confirmed for off farm income

testing the female underperformance hypothesis most previous studies have found evidence at the aggregate level that female entrepreneurs underperform relative to their male counterparts this study conducts a comprehensive test of this finding the test is conducted on a large swedish sample of 4200 entrepreneurs 405 females with 1 to 20 employees in all sectors of the economy our study confirms the results of several previous studies that female entrepreneurs tend to underperform relative to men when the data is examined at the most aggregate level at the same time our data reveals sharp structural differences between male and female entrepreneurs in an extensive multi variate regression with a large number of controls it turns out that female underperformance disappears for three out of four performance variables the only exception is sales no gender difference is found for profitability a more detailed analysis reveals that the evidence of female underperformance is much weaker in larger firms and nonexistent in firms with only one employee if it is true that female entrepreneurs on average have weaker preferences for sales growth while we consistently find that they do not underperform in terms of profitability our study provides no support for female underperformance given differences in preferences

patents and the survival of internet related ipos abstract we examine the effect of patenting on the survival prospects of 356 internet related firms that made an initial public offering on the nasdaq at the height of the stock market bubble of the late 1990s by march 2005 almost 2 3 of these firms had delisted from the exchange changes in the legal environment in the us in the 1990s made it much easier to obtain patents on software and ultimately on business methods though less than 1 2 of the firms in our sample obtained or attempted to obtain patents for those that did we hypothesize that patents conferred competitive advantages that translate into higher probability of survival though they may also simply be a signal of firm quality controlling for other determinants of firm survival patenting is positively associated with survival quite different processes appear to govern exit via acquisition compared to exit via delisting from the exchange due to business failure firms that applied for more patents were less likely to be acquired though if they obtain unusually highly cited patents they may be a more attractive acquisition target these findings do generally not hold true for business method patents which do not appear to confer a survival advantage

models and their uses it is argued that economists ought to recognize that modeling in different styles will be appropriate for different purposes or different stages in the development of an area of economics as an example the paper displays simulations of a stochastic general equilibrium model which shed light on the interpretation of widely discussed small macroeconomic vector autoregressive models connecting monetary variables to output and prices this abstract was borrowed from another version of this item

the survival and growth of new establishments in sweden 1987 1995 the aim of the study is to examine the survival of new establishments and to identify factors affecting their survival probability and their employment growth this study uses a unique data set on all new establishments that were created in sweden 1987 and 1988 with the exception of the construction industry the results show among others that i new establishments face a high risk of closing down ii the probability of establishment survival increases with the age and size of the establishment iii variables that are assumed to measure access to resources being a part of a multi unit firm and being new due to merger or dispersal have a positive effect on survival iv the number of employees at the start up year has a negative effect on the employment growth and v demographic and educational factors are important in explaining survival and growth

firm growth and laplace distribution the importance of large jumps abstract recent empirical studies have shown that firm growth rate distribution is not gaussian but closely follows a laplace distribution this robust feature of the growth rate distribution challenges existing models based on gibrat s model because it predicts a gaussian distribution first we analyze more than 100 000 japanese firms and empirically show that the laplace shape can be observed for the japanese firms then by using the theory of stochastic processes we theoretically show that the absence of jumps causes the discrepancy between gibrat s model and the laplace shape in particular based on the laplace shape and the law of proportionate effect we show that the firm growth process is a jump process in other words firm growth cannot be explained by the consequence of many small shocks but is determined by a few large jumps the widely observed laplace distribution reflects this jump property of firm growth dynamics

typology of the french regional development revealing the refugee versus schumpeter effects in new firm start ups in this article we analyse the relationships between unemployment rates and new firm start up rates in france using a quarterly data basis covering the period 1993 to 2011 we identify thanks to data analysis methods different classes that show different types of development among the french regions for each of these classes the existence of refugee schumpeter effects both in the short run and in the long run is revealed at the national level it appears that the refugee effect explains the dynamics of entrepreneurship in france over the period 2000 to 2011 necessity is the key motivation for new french firms

the j curve evidence from commodity trade between uk and china in testing the short run j curve effect and the long run effects of currency depreciation on the trade balance many researchers have used either trade data between one country and the rest of the world or between one country and another trading partner both groups are said to suffer from aggregation bias to reduce the bias in this article we consider trade data between one country the us and her trading partner china disaggregated by commodity we use imports and exports of 88 industries 2 digit and 3 digit classifications and cointegration analysis to show that the trade balance of at least 34 of the industries react favourably to real depreciation of the dollar the j curve effect is detected in 22 industries furthermore most of these industries that are sensitive to currency depreciation are durable commodity groupings

an analysis of new firm survival using a hazard function a unique data set is used to provide a detailed examination of the survival of newly established manufacturing firms in north east england using data on 781 firms established between 1973 and 2001 log logistic hazard models are estimated separately for i micro enterprises and ii small and medium establishments smes both micro enterprises and smes show clear evidence of positive duration dependence followed by negative duration dependence we find the two firm types are differentially affected by firm specific and macro economic variables increases in initial plant size impact negatively on micro enterprise survival and positively on sme survival

employment and smes during crises the persistent increasing duration of unemployment has become an issue during economic crises although lay offs at large firms normally make headlines during crises we still know little about the potential impact of firm size on adjustment behavior in a crisis we studied effects of firm size on employment growth during economic slowdowns using a rich microeconomic database for the 1988 2007 period in portuguese manufacturing industry the results show that economic downturns affect firm growth negatively this negative effect is found to be higher for larger firms both during and immediately following crisis periods small and medium sized enterprises smes emerge as potential stabilizers in downturn periods however larger firms seem to be able to quickly recover from downturn periods our results contribute to the scarce literature and to the understanding of the portuguese case where many smes secure most jobs these first results may be useful because smes play a determinant role in other european union economies

consolidation by merger the uk beer market this paper examines the determinants of market structure in the uk brewing industry over 1949 1969 sutton sunk costs and market structure price competition advertising and the evolution of concentration 1991 points to technology and advertising races as two key drivers of market concentration this study uses an own built longitudinal data set of the population of firms and breweries and reveals the importance of institutional factors in explaining the dynamics of market structure the practice of tying outlets to brewers and legal restrictions on opening retail outlets together with a permissive policy towards mergers made acquisition of medium sized firms and brewery closure shortly after acquisition the main driving mechanism towards industry consolidation during this period the number of firms and plants fell sharply by 74 and 60 respectively and production rose by about 25 with no firm entry and just one new brewery opening as a result concentration increased and the market transformed from a highly fragmented one into a stable oligopoly

industrial dynamics and economic geography capasso m stam e and cefis e industrial dynamics and economic geography regional studies how do industries emerge and evolve over space in this special issue the fields of industrial dynamics and economic geography are brought together in order to achieve a richer and more fundamental understanding of the organization of industries over time and space than each of these fields could do separately firm heterogeneity at the micro level and industry composition of a region at the macro level provide important elements in the explanation of industry emergence and evolution over space history and space matter in the evolution of industries this special issue shows how and why

persistence of initial debt in the long term employment dynamics of new firms this paper investigates whether a firm s future growth is independent of its initial debt structure the non parametric test consists of determining whether the conditional size distribution for firms surviving through early years of life depends upon debt to asset ratio at birth initially i test for initial size dependence in the growth process by applying pakes and ericson 1998 procedure i then test the hypothesis that initial debt to asset ratios are irrelevant to growth of ten year old manufacturing firms i reject the null of independence and find evidence of a non monotonic relationship between age ten conditional size and the initial debt to asset ratio ce texte examine la question a savoir si la croissance future d une firme depend de la structure initiale de sa dette le test non parametrique consiste a determine si la distribution conditionnelle de la taille des firmes qui survivent au cours des premieres annees depend du ratio dette actif a la naissance l auteur teste d abord l independance de la taille initiale et du processus de croissance a l aide de la procedure de pakes et ericson 1998 et ensuite l hypothese que le ratio initial dette actif n est pas pertinent pour expliquer la croissance de firmes manufacturieres qui ont survecu dix ans l hypothese nulle d independance est rejetee et on trouve trace d une relation non monotone entre la taille conditionnelle a dix ans et le ratio initial de la dette sur l actif

growth of firms in developing countries evidence from cote d ivoire the paper presents evidence in support of a particular growth process of firms that is consistent with a missing middle in the size distribution of manufacturing firms in african countries firm growth is explained by size and age effects as a result of efficiency exploiting through scale enlargements and learning but is strongly moderated by reputation effects and formal legitimation which facilitate access to output markets and resources complementing the model with data on growth obstacles as perceived by the owners of firms medium sized firms are found to be strongly hurt by insufficient access to infrastructure and financial services

generalising gibrat using chinese evidence founded on fieldwork this paper reports on determinants of small firm growth and survival using fieldwork evidence collected by face to face and telephone interviews it extends the basic size age model to a comprehensive growth model with two types of additional explanatory variables firm specific and business environmental estimation is by log linear regression on chinese cross section data with corrections for sample selection bias and heteroskedasticity our results from the comprehensive model highlight the importance of location choice and customer orientation for the growth of chinese private firms

survival of newly founded businesses a log logistic model approach based on a longitudinal database we test the liability of adolescence hypothesis which states that new firm hazard rates follow an inverted u shaped pattern that is the hazard rate is low for the initial period the end of adolescence is marked by a hazard maximum from which the rate declines monotonically we use a log logistic model which shows that the liability of adolescence argument describes the hazard rates of new establishments for all two and three digit industries fairly well further the rate shows that the desegregation of industries matters and considerable differences are found within and across two and three digit low moderate and high tech industries in assessing the effect of market environment conditions on risk we find that risk to be elevated in a relatively large number of two digit low and high tech industries in the presence of scale economies but it is substantially reduced in moderate tech industries by contrast the hazard rate tends to be reduced for quite a large number of three digit low moderate and high tech industries in comparison with the two digit industries indicating a longer adolescence the influence of start up size in reducing the hazard rate is apparently similar between two and three digit low moderate and high tech industries the impact of market growth on the risk of failure is not much different for both two and three digit low moderate and high tech industries

bank debt restructurings and the composition of exchange offers in financial distress this article examines the relation between bank debt forgiveness and the structure of public debt exchange offers in financial distress i find that the structure of exchange offers and the likelihood of an offer s success are significantly related to whether the bank participates in the restructuring transaction exchange offers made in conjunction with bank concessions are characterized by significantly greater reductions in public debt outstanding and significantly less senior debt offered to bondholders overall the results suggest that the structure of a firm s public and private claims significantly affects the firm s ability to modify its capital structure in financial distress recent empirical studies provide apparently conflicting evidence on the relation between the mix of private and public debt in a firm s capital structure and the ability of the firm to restructure its debt outside of bankruptcy for example gilson john and lang 1990 find that the likelihood of a successful debt restructuring is positively related to a firm s reliance on bank borrowing in contrast asquith gertner and scharfstein 1994 and james 1995 find that for firms with public debt outstanding banks rarely make unilateral concessions indeed the latter two studies suggest that the avoidance of bankruptcy depends on the ability to restructure public not private debt claims finally gilson 1994 finds less debt reduction in financial distress the higher the proportion of bank debt a firm uses in this article i examine the relation between bank debt restructurings and the composition of public debt exchange offers by financially distressed firms the secured status of bank debt and institutional constraints on bank debt for equity swaps imply that banks are unlikely to provide debt forgiveness unless their claims are impaired i e the face value of the bank s claim is greater than the value of the collateral net of transactions and bankruptcy costs 2 however drawing on theoretical work by gertner and scharfstein 1991 i argue that bank participation in a restructuring can play an important role in resolving

the effect of capital structure on a firm s liquidation decision abstract a firm s liquidation can impose costs on its customers workers and suppliers an agency relationship between these individuals and the firm exists in that the liquidation decision controlled by the firm as the agent affects other individuals the customers workers and suppliers as principals the analysis in this paper suggests that capital structure can control the incentive conflict problem of this relationship by serving as a pre positioning or bonding mechanism appropriate selection of capital structure assures that incentives are aligned so that the firm implements the ex ante value maximizing liquidation policy

the role of linkages in firm performance evidence from southern italy abstract this paper estimates the probability of success of post entry performance of new firms using survey data from a group of southern italian small firms several factors involving inter firm linkages contribute to success especially production for order and subcontracting the empirical investigation supports hirschman s idea on the industrialization process and positive assessments of the downsizing phenomenon in italy

small firms in economic theory this is the fourth of a series of critical survey articles the aim of the series is to report on recent developments to provide an assessment of alternative approaches and to suggest lines of future inquiry it is intended that the articles will be accessible not only to other academic researchers but also to students and others more practically involved in the economy future survey articles will include warren samuels on institutional economics and philip arestis on post keynesian

on the growth of foreign affiliates multinational plant networks joint ventures and flexibility we take a flexibility perspective to analyse employment growth in a large sample of japanese manufacturing affiliates in nine asian countries during the years leading up to and into the asian financial crisis 1995 1999 we find that joint ventures are less flexible than wholly owned affiliates in responding to changing environmental conditions in the focal country and underperform in high growth environments multinational enterprises mnes use the flexibility created by their multinational plant network to adjust affiliate employment in response to labour cost changes in other countries in which they operate plants however no evidence was found that the presence of joint ventures in multinational plant networks reduces this network flexibility our findings suggest that more research is needed on the heterogeneous responses of mnes and their affiliates to changing economic environments

simulation of concentration development from modified gibrat growth entry exit processes gibrat s law is augmented to produce a more general stochastic model of concentration consisting of growth entry and exit processes empirical facts on growth entry and exit reported elsewhere are employed to calibrate the model which is then repeatedly simulated generating concentration data for 280 hypothetical industries grouped under fourteen types the simulated data are used to investigate the importance of growth entry and exit in shaping concentration development most important is systematic firm level growth entry and exit are much less significant as is random growth variability which features prominently in previous stochastic models parallels with previous interindustry research are drawn copyright 1995 by blackwell publishing ltd

impact of exchange rate uncertainty on commodity trade between us and sweden previous studies that investigated the effects of exchange rate uncertainty on the trade flows of sweden employed aggregate trade data either between sweden and the rest of the world or at bilateral level between sweden and her major trading partners in this article we disaggregate the trade data and employ the import and export data from 87 industries that trade between sweden and the us we find that exchange rate volatility has significant short run effects on the trade flows between the two countries in almost two third of the industries however the short run effects are translated into the long run effects in one third of the cases furthermore the real depreciation of krona against the dollar was found to have favourable effects on the overall trade balance between the two countries

high growth entrepreneurial firms in africa a quantile regression approach this article analyses the growth performance of a large set of entrepreneurial firms in ten manufacturing sectors of 11 sub saharan african countries the focus of the article is on identifying those entrepreneurs attributes and firm characteristics that tend to generate a significant number of high growth firms in these countries to this end we use a quantile regression which provides a more complete estimation of the growth distribution of firms conditional on different attributes the results indicate that firms that engage in product innovation have their own transport means and are connected to the internet through their own website are especially characterized by higher growth rates and also display a distribution of growth rates skewed to the right hosting a higher number of high growth firms the effect of the last two variables which relate to distance bridging modes of infrastructure points to the self reinforcing growth effects they generate in creating wider input and output markets education raises growth opportunities by affecting the lower quantiles but it does not appear to influence the upper quantiles the estimated conditional growth distributions for the technology intensive machinery and electronics sectors show more extreme tails and a lower mean in comparison to the traditional industries indicating the more risky nature of doing business in these industries

export performance in china s regional economies china enjoyed unprecedented economic growth in the 1980s and 1990s associated with this growth was the rapid expansion of exports from the chinese regions this study aims to provide an empirical assessment of export performance in the chinese regions during 1992 2001 it has shown that on an average china s regional economies have only achieved 70 of their export potential leaving substantial scope for improvement there is also considerable variation in export performance among the chinese regions with the noncoastal areas lagging behind in addition this article also shows that several region specific factors e g foreign direct investment government spending infrastructure development and the nonstate sector have affected regional export performance positively furthermore it is found that the development of china s western regions has boosted and will continue to improve the export sectors in these regions

risk aversion uncertain information and market efficiency abstract this paper develops and tests the uncertain information hypothesis as a means of explaining the response of rational risk averse investors to the arrival of unanticipated information the theory predicts that following news of a dramatic financial event both the risk and expected return of the affected companies increase systematically and that prices react more strongly to bad news than good an empirical investigation of over 9000 marketwide and firm specific events produces results consistent with these predictions we conclude that the market reacts to uncertain information in an efficient if not instantaneous manner

new firm survival new results using a hazard function a limitation of audretsch s 1991 study of new firm survival was the level of aggregation to industries this precluded linking establishment specific characteristics such as organizational structure and size to post entry performance the purpose of this paper is to relate the post entry performance of individual establishments not only to their technological and market structure environments but also to establishment specific characteristics we do this by estimating a hazard duration function for more than 12 000 individual establishments in u s manufacturing started in 1976 by tracking their subsequent performance over a ten year period we conclude that establishment specific characteristics which audretsch was not able to capture in his earlier study play an important role in shaping the exposure to risk confronting new establishments copyright 1995 by mit press

when is gibrat s law a law the purpose of this article is to investigate if the industry context matters for whether gibrat s law is rejected or not using a dataset that consists of all limited firms in five digit nace industries in sweden during 1998 2004 the results reject gibrat s law on an aggregate level since small firms grow faster than large firms however gibrat s law is confirmed about as often as it is rejected when industry specific regressions are estimated it is also found that the industry context e g minimum efficient scale market concentration rate and number of young firms in the industry matters for whether gibrat s law is rejected or not

security pricing and deviations from the absolute priority rule in bankruptcy proceedings claims ultimately awarded to shareholders of firms in reorganization were examined for a sample of 30 filings under the 1978 bankruptcy reform act we measured the amount paid to shareholders in excess of that which they would have received under the absolute priority rule and found that this amount represents on average 7 6 of the total awarded to all claimants evidence is also reported that common share values reflect a significant proportion of value ultimately received in violation of absolute priority suggesting that deviations from the rule were expected by the equity markets the absolute priority rule hereafter apr states that a bankrupt firm s value is to be distributed to suppliers of capital such that senior creditors are fully satisfied before any distributions are made to junior creditors and junior creditors are paid in full before common shareholders bankruptcy reorganization proceedings however are leaving shareholders and junior creditors with valuable assets even when senior claimants receive only partial settlements as barrett and sullivan 1988 noted traditionally shareholders have been last in line their claims on a troubled company s assets have had the lowest priority and their impact on the course of bankruptcy code proceedings generally has been next to nil but lately the balance of power has been shifting warner 1977 provided one of the early discussions of the implications of deviations from the apr baldwin and mason 1983 pp 510 511 examined the resolution of claims in the massey ferguson reorganization and provided no support for the hypothesis that the market believes absolute priority rules will be enforced if the firm defaults on its financial obligations franks and torous 1989 analyzed a sample of bankruptcies that occurred during the period 1970 through 1984 and found that 21 of 27 sample cases exhibited departures from the apr more recently weiss 1990 examined 37 firms that filed for bankruptcy between 1980 and 1986 and reported that 27 of the cases involved apr violations

long lasting bank relationships and growth of firms a puzzling but consistent result in the empirical literature on banking is that firms with close bank ties do not grow faster than bank independent firms in this paper we reconsider the link between relationship lending and firm growth distinguishing firms by size and expansion contraction conditions the idea is that the beneficial effects of relationship lending on information asymmetries can be compensated by other negative capture risk and externality effects which make relational banks reluctant to support long term growth projects of client firms and that the strength of these compensating effects varies with firm size and health status we explore the influence of long lasting bank relationships on employment and asset growth of a large sample of italian firms the main finding is that relationship lending hampers the efforts of small firms to increase their size while it mitigates the negative growth of troubled medium large enterprises

reconciling quantile autoregressions of firm size and variance size scaling the aim of this paper is to understand what economic mechanisms may cause the law of proportionate effect to break down for fast growing and shrinking firms recent evidence has highlighted that the first order coefficients of quantile auto regression of firm size decline across quantiles our theoretical results show that negative variance size scaling is sufficient to yield a decline in quantile auto regression coefficients if firm log size is laplace distributed conditional on size one period ahead however it is sufficient only for declining auto regression coefficients for fast growing firms under asymmetric laplace conditional log size if skewness is decreasing with size in other words if the growth of large firms is less dispersed and more left skewed size is a disadvantage for the growth of fast growers but not necessarily an advantage for fast decliners thus size related determinants of negative growth skewness such as diseconomies of growth market power and managerial attention issues impact on how the lpe is violated using data on dutch manufacturing companies from the business register of enterprises observed between 1994 and 2004 our empirical estimates of quantile regression models confirm the evidence of declining quantile regression coefficients for small medium firms 20 199 employees mainly in the right most quantiles and for the same subsample we find that growth rates variance and skewness are decreasing with size the theoretical propositions of the paper are thus corroborated

investment incentives debt and warrants abstract this paper models and characterizes investment incentive problems associated with debt financing the decision problem of residual claimants is explicity formulated and their investment policies are characterized the paper also analyzes the use of conversion features and warrants to control distortionary incentives these claims reverse the convex shape of levered equity over the upper range of the firm s earnings and this mitigates the incentive to take risk it is shown that under certain conditions such claims can be constructed to restore net present value maximizing incentives and simultaneously meet the financing requirements of the firm

sunk costs firm size and firm growth for several decades the conventional wisdom has been that expected firm growth rates are independent of firm size a property known as gibrat s law however recent empirical work has found a negative relation between firm growth and firm size this paper provides a theoretical explanation for this negative relation in a model of new firm growth where capacity and technology choices involve some degree of sunkness additional empirical implications of the theory of sunk costs are also developed these relate to profit rates tobin s q exit rates degree of sunkness of capacity costs as well as size and growth rates copyright 1995 by blackwell publishing ltd

return migration and the survival of entrepreneurial activities in egypt summary the literature shows that temporary international migrants have a high propensity to opt for an entrepreneurial activity upon return but the prospects of survival of these activities have not been explored we address this research question using longitudinal egyptian data we find that entrepreneurs migration experience significantly improves the chances of survival of their entrepreneurial activities adopting econometric techniques that control for return migrants nonrandom selection in unobservables we resort to a bivariate probit model and a two stage residual inclusion estimator using the rate of population growth and the real oil price as alternative instruments for migration

does gibrat s law hold evidence from canadian retail and manufacturing firms this paper investigates the validity of gibrat s law holding for firms in manufacturing and retail trade sectors the object is to expand our knowledge of gibrat s law to include non manufacturing firms a unique longitudinal firm level database which contains information on canadian incorporated establishments enables the inter industry comparison the findings of the analysis are that gibrat s law is violated in both manufacturing and retail sectors violations of gibrat s law for both sectors include i growth rates that depend on firm size ii growth variability that depends on firm size and iii a negative persistence of firm growth finally age effects or selection effects are not the causes of these violations