This study extends the occupational choice model to explore age effects for eight different types of boomer entrepreneurs. The empirical study relies on monthly Current Population Survey data across 11 years (2006-2016). Multilevel mixed-effects logistic regression models are estimated to incorporate individual- and metropolitan-level effects. Among boomer entrepreneurs, we find that novice, opportunity novice, part-time, and unincorporated entrepreneur rates rise at higher ages (55 and above), with a slightly n-shaped age effect for non-novice/switcher (versus novice/switcher), necessity novice (versus opportunity), full-time (versus part-time), and incorporated (versus unincorporated) boomer entrepreneurs. We also identify determinants such as race, health, marital status, education, and work history, with opposite effects for each pair of entrepreneur types, and end by comparing the driving forces for boomer and non-boomer entrepreneurs.
{"title":"Boomer Entrepreneurs: Age and Type","authors":"Ting Zhang, Z. Acs","doi":"10.2139/ssrn.2934744","DOIUrl":"https://doi.org/10.2139/ssrn.2934744","url":null,"abstract":"This study extends the occupational choice model to explore age effects for eight different types of boomer entrepreneurs. The empirical study relies on monthly Current Population Survey data across 11 years (2006-2016). Multilevel mixed-effects logistic regression models are estimated to incorporate individual- and metropolitan-level effects. Among boomer entrepreneurs, we find that novice, opportunity novice, part-time, and unincorporated entrepreneur rates rise at higher ages (55 and above), with a slightly n-shaped age effect for non-novice/switcher (versus novice/switcher), necessity novice (versus opportunity), full-time (versus part-time), and incorporated (versus unincorporated) boomer entrepreneurs. We also identify determinants such as race, health, marital status, education, and work history, with opposite effects for each pair of entrepreneur types, and end by comparing the driving forces for boomer and non-boomer entrepreneurs.","PeriodicalId":422760,"journal":{"name":"Kauffman Data: Kauffman Firm Survey (Topic)","volume":"51 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-11-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115224399","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We analyze a private firm’s likelihood of exiting through a merger or acquisition. To test our hypotheses we use the confidential version of the Kauffman Firm Survey data, the largest longitudinal dataset of newly formed businesses in the United States. Our results show that firms with R&D activity and those characterized by lower information asymmetry are more likely to become M&A targets. We also show that having intellectual property rights such as copyrights, patents and trademarks does not significantly affect the firm’s likelihood to exit through M&A. These results suggest that acquirers value the growth potential signaled through R&D rather than the existing intellectual property and therefore, firms with high quality innovations are the most attractive targets for acquisitions. The hypothesis that venture-backed firms are more likely to become M&A targets finds strong support in our analysis. Angels or venture capitalists have the first opportunity to liquidate some or all their equity holdings when the firm becomes an acquisition target. Our results also show that firms owned by serial entrepreneurs are more likely to become M&A targets. From an acquirer’s perspective, entrepreneurs with start-up experience are typically favored due to their proven ability to realize the growth potential of a venture as well as their willingness and ability to harvest value for themselves and their investors.
{"title":"Becoming M&A Targets: Evidence from Small, Privately Held Firms","authors":"Carmen Cotei, Joseph Farhat","doi":"10.2139/ssrn.2782772","DOIUrl":"https://doi.org/10.2139/ssrn.2782772","url":null,"abstract":"We analyze a private firm’s likelihood of exiting through a merger or acquisition. To test our hypotheses we use the confidential version of the Kauffman Firm Survey data, the largest longitudinal dataset of newly formed businesses in the United States. Our results show that firms with R&D activity and those characterized by lower information asymmetry are more likely to become M&A targets. We also show that having intellectual property rights such as copyrights, patents and trademarks does not significantly affect the firm’s likelihood to exit through M&A. These results suggest that acquirers value the growth potential signaled through R&D rather than the existing intellectual property and therefore, firms with high quality innovations are the most attractive targets for acquisitions. The hypothesis that venture-backed firms are more likely to become M&A targets finds strong support in our analysis. Angels or venture capitalists have the first opportunity to liquidate some or all their equity holdings when the firm becomes an acquisition target. Our results also show that firms owned by serial entrepreneurs are more likely to become M&A targets. From an acquirer’s perspective, entrepreneurs with start-up experience are typically favored due to their proven ability to realize the growth potential of a venture as well as their willingness and ability to harvest value for themselves and their investors.","PeriodicalId":422760,"journal":{"name":"Kauffman Data: Kauffman Firm Survey (Topic)","volume":"49 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-05-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121132946","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Our tax system imposes widely varying tax rates on investments in different activities, favors debt over equity, and favors pass-throughs over corporations. Targeted tax incentives can lower the cost of capital for small businesses, startups, and those that invest in intellectual property. But those advantages are weakened, and sometimes eliminated, because businesses that invest in new ideas rely more on higher-taxed equity than do firms that focus on tangible investment and because startups are often limited in their ability to use tax deductions and credits. These limits can more than offset the benefit from tax incentives.
{"title":"Tax Policy and Investment by Startups and Innovative Firms","authors":"Joseph Rosenberg, D. Marron","doi":"10.2139/ssrn.2573259","DOIUrl":"https://doi.org/10.2139/ssrn.2573259","url":null,"abstract":"Our tax system imposes widely varying tax rates on investments in different activities, favors debt over equity, and favors pass-throughs over corporations. Targeted tax incentives can lower the cost of capital for small businesses, startups, and those that invest in intellectual property. But those advantages are weakened, and sometimes eliminated, because businesses that invest in new ideas rely more on higher-taxed equity than do firms that focus on tangible investment and because startups are often limited in their ability to use tax deductions and credits. These limits can more than offset the benefit from tax incentives.","PeriodicalId":422760,"journal":{"name":"Kauffman Data: Kauffman Firm Survey (Topic)","volume":"30 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-02-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131070217","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We examine new firms created in 2004 and track their business status in the following four years using the Kauffman Firm Survey data. For firms that exited the sample during the 2004-2008 period, we distinguish between voluntary firm closure in the form of merger or acquisition and compulsory firm closure in the form of failure/permanently closed operations. We apply duration analysis with competing risks to test the effect of owner, business and industry characteristics on firm survival, closure and exit through M&A. The results show that by not taking into account the reason for exit (M&A versus permanently closed operations) we underestimate survival rates. In addition, factors that characterize closed businesses are different from those that characterize businesses that were sold or merged with other businesses.
{"title":"Factors Affecting Survival, Closure and M&A Exit for Small Businesses","authors":"S. Coleman, Carmen Cotei, Joseph Farhat","doi":"10.2139/ssrn.1768728","DOIUrl":"https://doi.org/10.2139/ssrn.1768728","url":null,"abstract":"We examine new firms created in 2004 and track their business status in the following four years using the Kauffman Firm Survey data. For firms that exited the sample during the 2004-2008 period, we distinguish between voluntary firm closure in the form of merger or acquisition and compulsory firm closure in the form of failure/permanently closed operations. We apply duration analysis with competing risks to test the effect of owner, business and industry characteristics on firm survival, closure and exit through M&A. The results show that by not taking into account the reason for exit (M&A versus permanently closed operations) we underestimate survival rates. In addition, factors that characterize closed businesses are different from those that characterize businesses that were sold or merged with other businesses.","PeriodicalId":422760,"journal":{"name":"Kauffman Data: Kauffman Firm Survey (Topic)","volume":"59 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116945056","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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