Ability or Finances as Constraints on Entrepreneurship?

Evidence from Survival Rates in a Natural Experiment

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

We use a natural experiment in Denmark to test the hypothesis that aspiring entrepreneurs face financial constraints because of low entrepreneurial quality. We identify 304 constrained entrepreneurs who start a business after receiving windfall wealth and examine the performance of these marginal entrepreneurs. We find that constrained entrepreneurs have significantly lower survival rates and lower profits when compared with a matched sample of unconstrained entrepreneurs. These results are consistent with the hypothesis that the marginal entrepreneur is of low quality.
Original languageEnglish
JournalReview of Financial Studies
Volume25
Issue number12
Pages (from-to)3684-3710
ISSN0893-9454
DOIs
Publication statusPublished - 2012

Cite this

@article{4bec465a68b246f7a6a9b128fbcb20fb,
title = "Ability or Finances as Constraints on Entrepreneurship?: Evidence from Survival Rates in a Natural Experiment",
abstract = "We use a natural experiment in Denmark to test the hypothesis that aspiring entrepreneurs face financial constraints because of low entrepreneurial quality. We identify 304 constrained entrepreneurs who start a business after receiving windfall wealth and examine the performance of these marginal entrepreneurs. We find that constrained entrepreneurs have significantly lower survival rates and lower profits when compared with a matched sample of unconstrained entrepreneurs. These results are consistent with the hypothesis that the marginal entrepreneur is of low quality.",
author = "Steffen Andersen and {Meisner Nielsen}, Kasper",
year = "2012",
doi = "10.1093/rfs/hhs107",
language = "English",
volume = "25",
pages = "3684--3710",
journal = "Review of Financial Studies",
issn = "0893-9454",
publisher = "Oxford University Press",
number = "12",

}

Ability or Finances as Constraints on Entrepreneurship? Evidence from Survival Rates in a Natural Experiment . / Andersen, Steffen; Meisner Nielsen, Kasper.

In: Review of Financial Studies, Vol. 25, No. 12, 2012, p. 3684-3710.

Research output: Contribution to journalJournal articleResearchpeer-review

TY - JOUR

T1 - Ability or Finances as Constraints on Entrepreneurship?

T2 - Evidence from Survival Rates in a Natural Experiment

AU - Andersen, Steffen

AU - Meisner Nielsen, Kasper

PY - 2012

Y1 - 2012

N2 - We use a natural experiment in Denmark to test the hypothesis that aspiring entrepreneurs face financial constraints because of low entrepreneurial quality. We identify 304 constrained entrepreneurs who start a business after receiving windfall wealth and examine the performance of these marginal entrepreneurs. We find that constrained entrepreneurs have significantly lower survival rates and lower profits when compared with a matched sample of unconstrained entrepreneurs. These results are consistent with the hypothesis that the marginal entrepreneur is of low quality.

AB - We use a natural experiment in Denmark to test the hypothesis that aspiring entrepreneurs face financial constraints because of low entrepreneurial quality. We identify 304 constrained entrepreneurs who start a business after receiving windfall wealth and examine the performance of these marginal entrepreneurs. We find that constrained entrepreneurs have significantly lower survival rates and lower profits when compared with a matched sample of unconstrained entrepreneurs. These results are consistent with the hypothesis that the marginal entrepreneur is of low quality.

U2 - 10.1093/rfs/hhs107

DO - 10.1093/rfs/hhs107

M3 - Journal article

VL - 25

SP - 3684

EP - 3710

JO - Review of Financial Studies

JF - Review of Financial Studies

SN - 0893-9454

IS - 12

ER -