How do bankruptcy laws affect entrepreneurship development around the world?
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Authors
Lee, S.
Yamakawa, Y.
Peng, Mike
Barney, J.
Date
2011Type
Journal Article
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Lee, S. and Yamakawa, Y. and Peng, M. and Barney, J. 2011. How do bankruptcy laws affect entrepreneurship development around the world? Journal of Business Venturing. 26 (5): pp. 505-520.
Source Title
Journal of Business Venturing
ISSN
School
School of Management
Collection
Abstract
How do bankruptcy laws as formal institutions affect entrepreneurship development around the world? Do entrepreneur-friendly bankruptcy laws encourage more entrepreneurship development at a societal level? We posit that if bankrupt entrepreneurs are excessively punished for failure, they may give up potentially high-return but inherently high-risk opportunities to start new businesses. Amassing a cross-country database from 29 countries spanning 19. years (1990-2008), we find that lenient, entrepreneur-friendly bankruptcy laws are significantly correlated with the level of entrepreneurship development as measured by the rate of new firm entry.
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