Small Business Failure Rates: Choice of Definition and the Size EffectJohn Watson and
Jim Everett
Journal of Entrepreneurial Finance, 1996, vol. 5, issue 3, 271-85 Abstract: Results of many previous studies on the rate of small business failure suggest an inverse relationship between size of business and propensity to fail. However, it has been suggested that this inverse relationship, between firm size and the rate of discontinuance, may more accurately be characterized as an inverse relationship between age of business and the rate of discontinuance. While some studies have confirmed the positive association between failure and age, they have generally found that a size effect persists even after controlling for age. The central objective of this study is to show how reported failure rates may depend heavily on the definition of failure adopted, and to examine the proposition that the results of previous studies reporting a negative association between propensity to fail and business size may have been driven by the choice of failure definition. Keywords: Bankruptcy; Mergers; Acquisitions; Failure Rate (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pep:journl:v:5:y:1996:i:3:p:271-85 Access Statistics for this article More articles in Journal of Entrepreneurial Finance from Pepperdine University, Graziadio School of Business and Management Contact information at EDIRC. |
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