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THE IMPACT OF INITIAL FINANCIAL STATE ON FIRM DURATION ACROSS ENTRY COHORTS* |
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| Authors: | KIM P. HUYNH ROBERT J. PETRUNIA MARCEL VOIA |
| Affiliation: | 1. Department of Economics, Indiana University, 105 Wylie Hall, 100 S. Woodlawn, Bloomington, Indiana 47405, U.S.A. e‐mail:kphuynh@indiana.edu;2. Department of Economics, Lakehead University, 955 Oliver Road, Thunder Bay, Ontario P7B 5E1, Canada. e‐mail:rpetruni@lakeheadu.ca;3. Department of Economics, Carleton University, 1125 Colonel By Drive, Ottawa, Ontario K1S 5B6, Canada. e‐mail:mvoia@connect.carleton.ca |
| 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 firms 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 during the period 1985–1997. |
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