Performance of Exiting Firms in Japan: An Empirical Analysis Using Exit Mode Data

Yojiro Ito and Daisuke Miyakawa
Additional contact information
Yojiro Ito: Economist, Institute for Monetary and Economic Studies (currently, Personnel and Corporate Affairs Department), Bank of Japan (E-mail: youjirou.itou@boj.or.jp)
Daisuke Miyakawa: Associate Professor, Hitotsubashi University Business School (E-mail: dmiyakawa@hub.hit-u.ac.jp)

No 22-E-07, IMES Discussion Paper Series from Institute for Monetary and Economic Studies, Bank of Japan

Abstract: Studies on firm performance have found that exiting firms in Japan persistently show better performance than surviving firms, and this persistence adversely affects aggregate productivity. We use the panel data of business enterprises along with unique information on their exit modes (i.e., default, voluntary closure, and merger) to show that a large part of such a "negative exit effect" is attributed to the firms exiting through mergers. Further, we confirm that the causal effect of those mergers results in positive growth in the productivity of merging firms. Given that the size of such a positive causal effect overwhelms the negative exit effect, resource reallocation through mergers positively contributes to the aggregate growth in productivity for Japanese firms.

Keywords: Productivity dynamics; Exit effects; Mergers (search for similar items in EconPapers)
JEL-codes: D24 G33 G34 O47 (search for similar items in EconPapers)
Date: 2022-05
New Economics Papers: this item is included in nep-bec, nep-cfn, nep-cse, nep-eff, nep-ent, nep-ind and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.imes.boj.or.jp/research/papers/english/22-E-07.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ime:imedps:22-e-07

Access Statistics for this paper

More papers in IMES Discussion Paper Series from Institute for Monetary and Economic Studies, Bank of Japan Contact information at EDIRC.
Bibliographic data for series maintained by Kinken ().