Firm Closure, Financial Losses and the Consequences for an Entrepreneurial Restart



sons such as illness makes restart more unlikely, while OTHERREAS, i.e., unspecified
other reasons, is insignificant, thus having no impact. If an argument within the entre-
preneurial team was a reason for business closure, this seems - for logical reasons - to
encourage entrepreneurs to venture anew; the effect of
QUARREL is significantly positive.

Table 3: Probit estimation results

Independent variable:

Occurrence of restart (yes/no)

Specification I

Specification II

Marginal effect a

P-value

Marginal effect a

P-value

Main covariates I: Closure reasons b c

DEBTS

-0,082 **

0,041

-0,061

0,143

NOTWORTH

0,007

0,859

-0,001

0,988

ILLIQUIDITY

0,012

0,723

0,027

0,463

WAGEEMPL

0,036

0,634

0,036

0,639

RETIRE

-0,247 ***

0,000

-0,254 ***

0,000

PRIVATE

-0,106 **

0,044

-0,107 **

0,040

OTHERREAS

0,038

0,374

0,038

0,372

QUARREL____________________________

0,193 ***

0,000

0,192 ***

0,000

Main covariates II: Bearer of financial losses b

Sharehol

-

-

-0,017

0,645

BANKS

-

-

-0,112 **

0,013

Otherstake________________________

-

-

0,024_________

0,573

Control variables

CAPITAL

0,000

0,482

0,000

0,412

CAPITALM

-0,010

0,771

-0,008

0,830

TEAM

0,134 ***

0,000

0,135 ***

0,000

TEAMM

0,005

0,946

-0,005

0,941

LIMITED

0,161 ***

0,000

0,158 ***

0,000

SIZE

0,003 ***

0,001

0,003 ***

0,001

SIZEM

0,043

0,443

0,043

0,433

AGE

-0,023 ***

0,001

-0,022 ***

0,001

AGEM

-0,144

0,129

-0,154

0,108

EAST

-0,037

0,237

-0,035

0,264

HTIND

-0,006

0,961

-0,008

0,943

OTHERIND

0,020

0,749

0,025

0,681

TECHSERV

0,230 ***

0,001

0,232 ***

0,001

OTHERSERV

0,131 *

0,054

0,132 *

0,051

CONSTRUCT

0,107 **

0,034

0,111 **

0,027

TRADE______________________________

0,080 *_______

0,074

0,083 *________

0,063

# of observations

853

853

Wald χ2 (df)

146.820 (20)

159.330 (27)

Pseudo R2

0.161_________

0.168_________

a Average marginal effect.

b No reference category because multiple statements were possible.

c Actually, there is another closure reason indicator available namely “change into a different self-employment
business”. Since this indicator would completely determine the outcome in the regression, 13 observations
which exclusively refer to this closure reason are not used.

* Significant at the 10 % level. ** Significant at the 5 % level. *** Significant at the 1 % level.

Note: Both indictors variance inflation factor and condition number do not indicate a multicollinearity problem.

Source: Own regression based on the ZEW Entrepreneurship Study and the ZEW Foundation Panel.



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