Macro economic instability and business exit: Determinants of failures and acquisitions of large UK firms

A. Bhattacharjee, C. Higson, S. Holly, P. Kattuman

    Research output: Working paper

    Abstract

    Using data over a 34-year span on UK quoted firms, this paper seeks to identify the factors that increase the likelihood of exit of firms. Firms may disappear through the mutually precluding events of bankruptcies and acquisitions. We use a competing-risks hazard model to determine characteristics leading to each outcome. Hazard models make use of the data on timing of these alternative outcomes and we exploit this to focus attention on how the hazards change over the business cycles, conditional on the post-listing age of the firm. We find that the volatility in macro environment has a role in determining, in different ways, the hazard of firms going bankrupt or being acquired.
    Original languageEnglish
    Place of PublicationCambridge
    PublisherUniversity of Cambridge
    Publication statusPublished - 2002

    Publication series

    NameCambridge Working Papers in Economics

    Keywords

    • bankruptcy
    • acquisitions
    • macro-economic instability
    • competing risks
    • Cox proportional hazards model

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