Legal form and risk exposure in Spanish firms

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Show simple item record Campos, Javier Carrasco, Raquel Requejo, Alejandro 2012-03-26T11:41:19Z 2012-03-26T11:41:19Z 2003
dc.identifier.bibliographicCitation Spanish Economic Review, 2003, v. 5, n. 2, pp.101-121
dc.identifier.issn 1435-5477
dc.description.abstract It is well-known that the legal form adopted by a firm determines the type of legal responsibility borne by its owners in case of bankruptcy. In this paper we argue that a firm under a limited liability status should be characterized by a higher than average bankruptcy probability, which ultimately captures their risk exposure when output is affected by exogenous shocks. To test this prediction we extend Lee’s (1976) switching regressions model to a panel dataset of 1313 Spanish firms from 1990–1994, separating them into corporate and entrepreneurial forms (with/without limited liability, respectively). We consider both random effects and fixed effects panel data models, taking into account the potential endogeneity between risk exposure and the legal form choice. Our results confirm the hypothesis that firms under limited liability have significant higher risk exposure than firms under unlimited liability.
dc.description.sponsorship Data and financial support provided by the Fundación Empresa Pública (Madrid)
dc.format.mimetype application/pdf
dc.format.mimetype text/plain
dc.language.iso eng
dc.publisher Springer
dc.rights © The original publication is available at
dc.subject.other Limited liability
dc.subject.other Risk exposure
dc.subject.other Sample selection
dc.subject.other Switching regressions
dc.subject.other Panal data
dc.title Legal form and risk exposure in Spanish firms
dc.type article PeerReviewed
dc.description.status Publicado
dc.subject.jel C20
dc.subject.jel G32
dc.subject.jel L21
dc.subject.eciencia Economía
dc.identifier.doi 10.1007/s101080300060
dc.rights.accessRights openAccess
dc.identifier.publicationfirstpage 101
dc.identifier.publicationissue 2
dc.identifier.publicationlastpage 212
dc.identifier.publicationtitle Spanish Economic Review
dc.identifier.publicationvolume 5
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