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Identifier to cite or link to this item: https://hdl.handle.net/10086/82048

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Title
Outside or inside the firm? The impact of debt financing on the exit routes of start-up firms
Creator
Creator Name
HONJO, Yuji HONJO, Yuji
Affiliation
Affiliation Name
Chuo Univeristy
Affiliation
Affiliation Name
TDB-CAREE
Creator Name
IWAKI, Yunosuke IWAKI, Yunosuke
Affiliation
Affiliation Name
Teikoku Databank, Ltd.
Affiliation
Affiliation Name
TDB-CAREE
Creator Name
KATO, Masatoshi KATO, Masatoshi
Affiliation
Affiliation Name
Kwansei Gakuin University
Affiliation
Affiliation Name
TDB-CAREE
Editor
Contributor Name
TDB-CAREE (Graduate School of Economics Hitotsubashi University Teikoku Databank Center for Advanced Empirical Research on Enterprise and Economy)
Key Word
Bankruptcy
Debt financing
Long-term debt
Merger
Outside creditors
Start-up
Voluntary liquidation
JEL
G33
G34
M13
Abstract
This study explores the impact of initial debt financing on the survival of start-up firms by identifying three types of exit routes: bankruptcy, voluntary liquidation, and merger. Using a discrete-time duration model for Japanese start-up firms, we examine how debt financing affects the time from founding to exit. We find that firms that initially rely on debt financing from outside creditors are more likely to go bankrupt and that long-term debt, rather than short-term debt, is positively associated with the time to exit due to bankruptcy. In contrast, such firms are less likely to liquidate voluntarily, and long-term debt is negatively associated with the time to voluntary liquidation. Moreover, they are less likely to exit via merger, and long-term debt is negatively associated with the time to exit via merger. Furthermore, unlike voluntary liquidation and merger, macroeconomic conditions influence the likelihood of bankruptcy.
Publisher
TDB-CAREE (Graduate School of Economics Hitotsubashi University Teikoku Databank Center for Advanced Empirical Research on Enterprise and Economy)
Issued Date
2024-01
Language
English(eng)
Resource Type
technical report
Version Type
VoR
Is Part OfRelation -
Related Title
TDB-CAREE Discussion Paper Series ; No. E-2023-02
Relation
Related Identifier
URI
  http://www7.econ.hit-u.ac.jp/tdb-caree/index.html
Number of Pages
33
Sponsorship
Teikoku DataBank
Appears in Collections
TDB-CAREE Discussion Paper Series
URL
https://hdl.handle.net/10086/82048