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Duration of new firms: The role of startup financial conditions, industry and aggregate factors

Author

Listed:
  • Kim Huynh

    (Bank of Canada - Bank of Canada)

  • Robert Petrunia

    (Lakehead University)

  • Marcel Voia

    (UO - Université d'Orléans, UniBuc - University of Bucharest)

Abstract

This paper documents the relative importance of firm, industry and aggregate factors on the post-entry performance of new firms. This study utilizes a unique administrative dataset, T2LEAP, which contains employment and balance sheet information for all incorporated Canadian firms. The data allow us to include financial variables such as the debt-to-asset ratio (leverage) and document their impact on firm survival. We perform duration analysis on all the entrant manufacturing firms during the period 1985–1996. In addition to leverage, we find that: firm characteristics such as size and labour productivity; industry conditions, such as the real exchange rate, the difference in the US–Canada tariff rates, entry penetration, and the capital–labour ratio; and aggregate conditions in terms of the yield gap also play a role in the survival prospects of new firms.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Kim Huynh & Robert Petrunia & Marcel Voia, 2012. "Duration of new firms: The role of startup financial conditions, industry and aggregate factors," Post-Print hal-04926622, HAL.
    • Handle: RePEc:hal:journl:hal-04926622
    DOI: 10.1016/j.strueco.2012.03.008
    as

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    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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