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Borrowing Patterns, Bankruptcy and Voluntary Liquidation

Author

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  • António R. Antunes
  • Pedro Portugal
  • José Mata

Abstract

We study the impact of financial variables upon bankruptcy and voluntary exit. Controlling for efficiency, which we find to decrease the odds of both bankruptcy and voluntary exit, characteristics of firms which correlate with the firms' access to funds, exert very different impacts upon the two modes of exit.Our findings support the idea that information asymmetries create cash constraints and that financial decisions are used to signal firms' quality and reduce the degree of information asymmetries between borrowers and lenders.

Suggested Citation

  • António R. Antunes & Pedro Portugal & José Mata, 2010. "Borrowing Patterns, Bankruptcy and Voluntary Liquidation," Working Papers w201027, Banco de Portugal, Economics and Research Department.
    • Handle: RePEc:ptu:wpaper:w201027
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    File URL: https://www.bportugal.pt/sites/default/files/anexos/papers/wp201027.pdf
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    References listed on IDEAS

    as
    1. Holtz-Eakin, Douglas & Joulfaian, David & Rosen, Harvey S, 1994. "Sticking It Out: Entrepreneurial Survival and Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 102(1), pages 53-75, February.
    2. Robert E. Lucas Jr., 1978. "On the Size Distribution of Business Firms," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 508-523, Autumn.
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    Citations

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    Cited by:

    1. Masatoshi Kato & Yuji Honjo, 2015. "Entrepreneurial human capital and the survival of new firms in high- and low-tech sectors," Journal of Evolutionary Economics, Springer, vol. 25(5), pages 925-957, November.
    2. repec:cfe:wpcefa:2014_07 is not listed on IDEAS
    3. Steffen Mueller & Jens Stegmaier, 2015. "Economic failure and the role of plant age and size," Small Business Economics, Springer, vol. 44(3), pages 621-638, March.
    4. repec:cfe:wpcefa:2015_06 is not listed on IDEAS
    5. António R. Antunes & Ricardo Martinho, 2012. "A Scoring Model For Portuguese Non-Financial Enterprises," Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.
    6. Castro, Gabriela & Félix, Ricardo M. & Júlio, Paulo & Maria, José R., 2015. "Unpleasant debt dynamics: Can fiscal consolidations raise debt ratios?," Journal of Macroeconomics, Elsevier, vol. 44(C), pages 276-294.
    7. Sónia Félix, 2018. "Borrowing constraints and firm dynamics," Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.

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    More about this item

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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