The end of the corporate life cycle

Loderer, Claudio; Wälchli, Urs (25 January 2013). The end of the corporate life cycle (Unpublished). In: Association Francaise de Finance (AFFI) Meetings. Lyon. 28.-31. Mai 2013.

Text - Other
Available under License BORIS Standard License.

Download (199kB) | Preview

This paper asks how takeover and failure hazards change
as listed firms get older. The hypothesis is that they
increase because firms gradually run out of growth
opportunities. We find the opposite. Both takeover and
failure hazard drop significantly with age. The decline in
takeover hazard can be explained with Loderer, Stulz, and
Waelchli’s (2013) “buggy whip makers” hypothesis:
Because old firms are comparatively well-managed and
are affected by limited agency problems, on average, they
offer little value added potential to acquirers. Failure
hazard drops because to learning. The results are robust
to various alternative interpretations and cannot be
explained by unobserved heterogeneity. While hazards
decline with age, they do not go to zero. This explains
why, eventually, all listed firms disappear

Item Type:

Conference or Workshop Item (Paper)


03 Faculty of Business, Economics and Social Sciences > Department of Business Management > Institute of Financial Management

UniBE Contributor:

Loderer, Claudio and Wälchli, Urs


600 Technology > 650 Management & public relations
300 Social sciences, sociology & anthropology > 330 Economics




Urs Wälchli

Date Deposited:

03 Dec 2013 10:16

Last Modified:

20 Dec 2014 18:47

Uncontrolled Keywords:

firm age, industry age, takeovers, financial distress, creative destruction




Actions (login required)

Edit item Edit item
Provide Feedback