This paper examines exit behaviour of small firms by using data from The Survey of Retirement of Small Firm Managers, which provides information on exit and post-exit behaviour of Japanese small firms and their managers. First, it is shown that small firm exits occur not just because of economic difficulties in their business (‚economic-forced exit’) but also for various other reasons (‚non-economic-forced exit’). Logit estimates show that the probability of economic-forced exit is significantly higher if the manager is relatively young and male, the firm has loans from a financial institution, its sales are tending to decrease, and so on. It is also shown that a rather large proportion of managers continue to work after exit, and this proportion, especially that of employed workers, is higher in the case of economic-forced exits. These results indicate the potential importance of distinguishing these two classes of exits in exit studies.
Small Business Economics – Springer Journals
Published: Dec 19, 2006
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