Business Failure in UK and US Quoted Firms: Impact of Macroeconomic Instability and the Role of Legal Institutions

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

    Research output: Working paper

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    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
    PublisherFaculty of Economics, University of Cambridge
    Publication statusPublished - 2004

    Publication series

    NameCambridge Working Papers in Economics
    PublisherFaculty of Economics, University of Cambridge
    No.0420

    Keywords

    • Bankruptcy
    • Acquisitions
    • Macroeconomic instability
    • COMPETING RISKS
    • Cox Proportional Hazards Model
    • Chapter 11
    • receivership

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    Bhattacharjee, A., Higson, C., Holly, S., & Kattuman, P. (2004). Business Failure in UK and US Quoted Firms: Impact of Macroeconomic Instability and the Role of Legal Institutions. (Cambridge Working Papers in Economics; No. 0420). Faculty of Economics, University of Cambridge. http://ideas.repec.org/p/cam/camdae/0420.html