Patterns of Firm Entry and Exit in U.S. Manufacturing Industries

Dunne, Timothy; Roberts, Mark J.; Samuelson, Larry

doi:10.2307/2555454

Cited by 1,352 publications

(944 citation statements)

References 26 publications

Supporting

Mentioning

828

Contrasting

Unclassified

Order By: Relevance

“…We set the annual depreciation rate, δ, to be 0.07 and we assume that the exit rate of privately held firms, 1 − ζ, is 10%. This exit rate implies a ten year survival rate of 34%, and is consistent with estimates from Dunne et al (1988). Since ζ is a major determinant of financial flows for privately held firms 7 , later, we perform robustness checks on ζ.…”

Section: Calibrationsupporting

confidence: 68%

External Financing and the Role of Financial Frictions over the Business Cycle: Measurement and Theory

Shourideh

Zetlin‐Jones

2012

SSRN Journal

View full text Add to dashboard Cite

We examine the quantitative importance of financial market shocks in accounting for business cycle fluctuations. We emphasize the role financial markets play in reallocating funds from cash-rich, low productivity firms to cash-poor, high productivity firms. Using evidence on financial flows at the firm level, we find that for publicly traded firms (in Compustat), almost all investment is financed internally. However, using an alternative data source (Amadeus), we find that most investment by privately held firms is financed through borrowing. Motivated by these observations, we build a quantitative model featuring publicly and privately held firms that face collateral constraints and idiosyncratic risk over productivity as well as non-financial linkages. In our calibrated model, we find that a shock to the collateral constraints which generates a one standard deviation decline in the debt-to-asset ratio leads to a 0.5% decline in aggregate output on impact, roughly comparable to the effect of a one standard deviation shock to aggregate productivity in a standard real business cycle model. In this sense, we find that disturbances in financial markets are a promising source of business cycle fluctuations when non-financial linkages across firms are sufficiently strong. * We are indebted to V.V. Chari and Larry Jones for valuable advice. We would also like to thank

show abstract

Section: Calibrationsupporting

confidence: 68%

External Financing and the Role of Financial Frictions over the Business Cycle: Measurement and Theory

Shourideh

Zetlin‐Jones

2012

SSRN Journal

View full text Add to dashboard Cite

show abstract

“…The entry-exit studies provide some useful insights into reasons underlying failure, even though such studies may be largely descriptive. See Hall (1992), p. 239, and also Dunne et al (1988), Headd ( 2003) , Hudson (1986), andBoden (2000). initial 22 ratios, Altman settled on five ratios as providing in combination the best overall prediction of corporate bankruptcy.…”

Section: Financial Ratio Analysismentioning

confidence: 99%

Examining the Impact of Credit Access on Small Firm Survivability

Mach

Wolken

2012

Contributions to Economics

View full text Add to dashboard Cite

This paper examines the effects of credit availability on small firm survivability over the period 2004 to 2008 for non-publicly traded small enterprises. Using data from the 2003 Survey of Small Business Finances, we develop failure prediction models for a sample of small firms that were confirmed to have been in business as of December 2003, with particular attention to the impact of credit constraints. We find that credit constrained firms were significantly more likely to go out of business than non constrained firms. Moreover, credit constraint and credit access variables appear to be among the most important factors predicting which small U.S. firms went out of business during the 2004-2008 period even though an extensive set of firm, owner, and market characteristics were also included as explanatory factors.*The views expressed herein are those of the authors. They do not necessarily reflect the opinions of the Federal Reserve Board or its staff. The authors would like to thank participants of the Financial Structure, Financial Studies, and Microeconomics Surveys Sections' brown bag workshop for helpful comments and suggestions on an earlier version of this research. John Wolken was formerly a member of the staff of the Board of Governors. Valuable research assistance was provided

show abstract

“…This is like Dunne et al (1988), except that a plant relocating outside the region (and possibly overseas) is treated as an exit as it is no longer contributing to the regional economy. In fact, the FDI plants are located towards the "centre" of the region, so that few plants, if any, relocate short distances to locations outside the region.…”

Section: Definition Of a Plant And Exitmentioning

confidence: 99%

Re-investment and the survival of foreign-owned plants

Wren¹,

Jones²

2009

Regional Science and Urban Economics

View full text Add to dashboard Cite

Foreign-owned plants have higher conditional exit rates, but this paper tests the hypothesis that re-investment "embeds" these plants, leading to significantly longer survival time durations. A unique dataset is used for 265 plants that commenced in foreign ownership after 1985 in North East England, distinguishing between start-up ("greenfield") and acquisition plants. Survival is measured at 2000, and the paper analyses the duration to the first reinvestment and survival, allowing for selection into the multiple investment state. It finds that re-investment increases the lifetime of start-up plants, but this is insignificant once selection is controlled for, while for acquisition plants there is no difference. Grants affect selection, but not the survival of start-up plants. The paper offers little support for re-investment as a source of "embeddedness".JEL classification: O12, L20, R58

show abstract

Patterns of Firm Entry and Exit in U.S. Manufacturing Industries

Cited by 1,352 publications

References 26 publications

External Financing and the Role of Financial Frictions over the Business Cycle: Measurement and Theory

External Financing and the Role of Financial Frictions over the Business Cycle: Measurement and Theory

Examining the Impact of Credit Access on Small Firm Survivability

Re-investment and the survival of foreign-owned plants

Contact Info

Product

Resources

About