Review of Financial Studies Vol. 25 No. 12 2012
Ability or Finances as Constraints on Entrepreneurship? Evidence from Survival Rates in a Natural Experiment
open access
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.
- DOI
- 10.1093/rfs/hhs107
- Volume
- 25
- Issue
- 12
- Pages
- 3684-3710
- Language
- en
- Sources
- openalex crossref