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| Author: | Schäfer, D. Talavera, O. |
| Title: | Small business survival and inheritance: evidence from Germany |
| Journal: | Small business economics
2009 : JAN, VOL. 32:1, p. 95-109 |
| Index terms: | entrepreneurship small business finance moral hazard models Germany |
| Language: | eng |
| Abstract: | This paper explores whether small businesses face financial constraints (henceforth as: fin-cntrs.) affecting their survival. A model of moral hazard is developed with fin-cntrs. arising endogenously. The model predicts that higher private assets relax fin-cntrs., having a positive effect on the firm's probability of survival. It is confimed through empirical analysis that the entrepreneur has a higher propensity to stay in business when inheriting capital. For entrepreneurs switching from self-employment into wage employment, this effect is especially strong. |
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