Economic failure and the role of plant age and size

Abstract

"This paper introduces a large-scale administrative panel data set on corporate bankruptcy in Germany that allows for an econometric analysis of involuntary exits where previous studies mixed voluntary and involuntary exits. Approximately 83 percent of all bankruptcies occur in plants with no more than 10 employees, and 61 percent of all bankrupt plants are not older than 5 years. The descriptive statistics and regression analysis indicate substantial negative age dependence with respect to bankruptcy risk but confirm negative size dependence for mature plants, only. Our results corroborate hypotheses stressing increasing capabilities and positional advantage, both predicting negative age dependence with respect to bankruptcy risk due to productivity improvements. The results are not consistent with the theories explaining age dependence via imprinting or structural inertia." (Author's abstract, IAB-Doku) ((en))

Cite article

Müller, S. & Stegmaier, J. (2014): Economic failure and the role of plant age and size. First evidence from German administrative data. (IAB-Discussion Paper 13/2014), Nürnberg, 27 p.