Citation

Merolla AT. Int. Rev. Law Econ. 1998; 18(1): 13-24.

Copyright

(Copyright © 1998, Elsevier Publishing)

DOI

10.1016/S0144-8188(97)00054-9

PMID

unavailable

Abstract

This paper provides a theoretical and empirical examination of the impact of latent hazards on manufacturing firms. I discuss the effects of corporate structure and changes in legal regime on firm exit and derive several testable propositions. The empirical analysis tests whether a firm's expected liability from latent hazards affects the length of time the firm remains in business. I find that firms in more hazardous industries have shorter life spans. This research is the first extensive empirical study on the exit decisions of firms in hazardous industries.