Institutional Quality and Firm Survival

21 Pages Posted: 28 Apr 2011

See all articles by Yi Che

Yi Che

Shanghai Jiao Tong University (SJTU) - Antai College of Economics and Management

Yi Lu

National University of Singapore (NUS) - Department of Economics

Zhigang Tao

The University of Hong Kong - School of Business

Date Written: March 2011

Abstract

The existing literature on firm survival focuses almost exclusively on firm- and industry-level determinants. What is generally overlooked, albeit extremely important for firm survival in developing countries, is the impact of institutional quality. Using data from manufacturing firms in China for the 1998-2005 period, we find that institutional quality has a significant and positive impact on the survival of private enterprises. Specifically, a one-standard-deviation increase in the security of property rights protection (the effectiveness of contract enforcement) leads to a 9.65 (6.2) percent decrease in the hazard rate of private enterprises. Our results are robust to the inclusion of both firm- and industry-level determinants and to various checks, such as alternative measures of institutional quality, different sub-samples, and different estimation methods.

Keywords: New firm survival, Institutional quality, Private enterprises

JEL Classification: M13, O43, L11

Suggested Citation

Che, Yi and Lu, Yi and Tao, Zhigang, Institutional Quality and Firm Survival (March 2011). Available at SSRN: https://ssrn.com/abstract=1824958 or http://dx.doi.org/10.2139/ssrn.1824958

Yi Che

Shanghai Jiao Tong University (SJTU) - Antai College of Economics and Management ( email )

Huashan Road 1954
Shanghai Jiao Tong University
Shanghai, Shanghai 200030
China

Yi Lu (Contact Author)

National University of Singapore (NUS) - Department of Economics ( email )

1 Arts Link, AS2 #06-02
Singapore 117570, Singapore 119077
Singapore
65-65166834 (Phone)

HOME PAGE: http://ylu6.weebly.com

Zhigang Tao

The University of Hong Kong - School of Business ( email )

Meng Wah Complex
Pokfulam Road
Hong Kong
China
(852) 2857-8223 (Phone)
(852) 2858-5614 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
93
Abstract Views
691
rank
329,434
PlumX Metrics