Determinants of Hazard Confronting New Entry: Does Financial Structure Matter? |
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Authors: | Fotopoulos Georgios Louri Helen |
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Institution: | (1) Department of Economics, University of Thessaly, Argonafton & Filellinon St., 382 21 Volos, Greece;(2) Athens University of Economics and Business, 76 Patission Street, Athens, 10434, Greece |
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Abstract: | This paper attempts to identify the determinants ofhazard confronting 219 new manufacturing firmsestablished in 1982–84 and followed up to1992 using a Cox regression model. Three sets ofvariables are combined in the analysis: firm, sectorand cohort specific. Financial, firm specificcharacteristics such as larger initial financialcapital size, conservative borrowing, heavier fixedasset commitment and lower diversification in terms ofholding other firms' assets are estimated to reducefirm hazard. Higher sectoral entry and lower sunk costsectoral requirements by increasing marketcontestability increase risk of failure together withcyclical variations. |
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Keywords: | Entry exit failure hazard new firms |
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