Moving in and out of financial distress: evidence for newly founded service sector firms
نویسنده
چکیده
The determinants of transitions between di erent states of nancial distress are analyzed using two versions of Markov chain models: a multinomial logit model without random e ects and a multinomial logit model capturing such unobservable factors. The empirical analysis is based on a panel data set containing information on 15,538 East German rms founded between 1994 and 1999. The estimation results indicate that the e ect of limited liability depends upon rms' starting state, the existence of corporate shareholders improves rms' nancial performance, multiple credit relationships have negative e ects and product diversi cation as well as positive macroeconomic conditions improve rms' nancial performance.
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