Summary This paper examines the tax administrative burden and its effect on new firm formation. It is well recognized that entrepreneurship and new firm formation are critical factors in determining economic growth and development. New firm entry into the marketplace enhances welfare in two distinct ways: 1) by promoting innovation, productivity and economic growth and 2) by increasing competition, which lowers prices and expands output. It is also well documented that barriers to entry reduce the likelihood that new firms will enter various sectors. We argue that the burden imposed by tax codes and tax compliance constitutes a barrier to entry that has been neglected in the previous literature. We use data from the World Bank to measure the administrative burden that the complexity of tax policy imposes on new firms. Additionally, we use a measure of new firm formation – entry density. Our data cover 118 countries over a period of six years. We find that the entry rate is significantly reduced by the tax administrative burden and that this effect is unrelated to general taxes on corporate profits and is robust to the inclusion of several important control variables.
This paper attempts to shed light on the nexus of relationships existing between failure, bankruptcy, institutional context, and local characteristics on one hand and entrepreneurship, firm survival, and performance on the other. The aim is to provide a larger vantage point from which to read the research included in this issue with the overall ambition to contribute to a better understanding of our entrepreneurial societies and the role of failure within markets. In this respect, the focus here is mainly on the institutions governing the bankruptcy procedures which do much more than simply regulating the exit of insolvent firms and protecting creditors' investments, minimizing the social cost of failures. They set up the revolving doors through which creditors can reinvest the recovered capital in new entrepreneurial projects and failed entrepreneurs can bring back to the market their skills and their entrepreneurial spirit for fostering new and hopefully successful ventures. Therefore, by managing bankruptcy, the institutions are not only protecting the economy. Instead, they have become a tool of economic policy, devoted to the delicate issue of regulating a physiological event to the market while avoiding too much waste of resources. In a more positive perspective, managing insolvency and failure is also a mean to strengthen competitiveness and growth, making it possible to stimulate the market in reshuffling skills and resources into new activities. A deeper understanding can in turn contribute to the implementation of better and more efficient policies by integrating bankruptcy as a natural component of firm and market life.
This paper explores the relation between ownership structure, board composition and firm performance among Swedish listed firms. The descriptive statistics show that Swedish board of directors has become more diversified in terms of gender. The analysis shows that board size has a significant negative effect on investment performance. Gender diversity has a small but negative effect on investment performance, and the same holds for CEO being on the board. When incorporating all the explanatory variables into the same equation the negative effect of larger boards dilutes the effect of gender diversity and having the CEO on the board.
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