Business failure in UK and US quoted firms: Impact of macroeconomic instability and the role of legal institutions

A. Bhattacharjee, Chris Higson, Sean Holly, Paul Kattuman

    Research output: Working paper

    Abstract

    Firms exit through the mutually precluding events of bankruptcy and acquisition. We use a competing risks hazard regression model to identify the characteristics leading to each of these two outcomes using over thirty years of data on US and UK quoted firms. We find evidence about the way in which macroeconomic factors affect firm survival in these two economies, in addition to firm and industry-specific factors. Further, there are significant differences in the way in which firms in the US and the UK react to changes in the macroeconomic environment and, particularly to macroeconomic instability. We argue that these differences in response may be attributable to differences in bankruptcy codes in the US and the UK.
    Original languageEnglish
    Place of PublicationCambridge
    PublisherUniversity of Cambridge
    Publication statusPublished - 2004

    Publication series

    NameCambridge Working Papers in Economics

    Keywords

    • bankruptcy
    • acquisitions
    • macroeconomic instability
    • competing risks
    • Cox proportional hazards model
    • receivership

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