Which Firms Exit and Why? An Analysis of Small Firm Exits in Japan |
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Authors: | Nobuyuki Harada |
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Affiliation: | (1) Graduate School of Systems and Information Engineering, University of Tsukuba, 1-1-1 Tennodai, Tsukuba, Ibaraki 305-8573, Japan |
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Abstract: | This paper examines exit behaviour of small firms by using data from The Survey of Retirement of Small Firm Managers, which provides information on exit and post-exit behaviour of Japanese small firms and their managers. First, it is shown that small firm exits occur not just because of economic difficulties in their business (‚economic-forced exit’) but also for various other reasons (‚non-economic-forced exit’). Logit estimates show that the probability of economic-forced exit is significantly higher if the manager is relatively young and male, the firm has loans from a financial institution, its sales are tending to decrease, and so on. It is also shown that a rather large proportion of managers continue to work after exit, and this proportion, especially that of employed workers, is higher in the case of economic-forced exits. These results indicate the potential importance of distinguishing these two classes of exits in exit studies. |
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Keywords: | small firm exit post-exit Japan |
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