Determinants of Hazard Confronting New Entry: Does Financial Structure Matter?

Determinants of Hazard Confronting New Entry: Does Financial Structure Matter? This paper attempts to identify the determinants ofhazard confronting 219 new manufacturing firmsestablished in 1982–84 and followed up to1992 using a Cox regression model. Three sets ofvariables are combined in the analysis: firm, sectorand cohort specific. Financial, firm specificcharacteristics such as larger initial financialcapital size, conservative borrowing, heavier fixedasset commitment and lower diversification in terms ofholding other firms' assets are estimated to reducefirm hazard. Higher sectoral entry and lower sunk costsectoral requirements by increasing marketcontestability increase risk of failure together withcyclical variations. Review of Industrial Organization Springer Journals

Determinants of Hazard Confronting New Entry: Does Financial Structure Matter?

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Kluwer Academic Publishers
Copyright © 2000 by Kluwer Academic Publishers
Economics; Industrial Organization; Microeconomics
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