Journal of Evolutionary Economics

, Volume 21, Issue 3, pp 407–446 | Cite as

From distress to exit: determinants of the time to exit

  • Sofie Balcaen
  • Sophie ManigartEmail author
  • Hubert Ooghe
Regular Article


This paper analyses the duration of the time to exit of distressed firms, differentiating between court driven exits (mainly bankruptcies) and voluntary liquidations. It examines how long firms survive after initial signs of economic distress. The study is conducted on an extensive dataset of 5,233 Belgian distress-related exits of mature firms, the majority being privately held. The results highlight that slack resources have an opposite effect on the timing of court driven exits and voluntary liquidations. On the one hand, high levels of available and potential slack increase the time to court driven exit, as they allow distressed firms to postpone an impending court driven exit. On the other hand, high available slack resources shorten the time to voluntary liquidation, since they make voluntary liquidation easier. Further, a high level of stakeholder dependence increases the time to exit after distress, whether the firm exits through voluntary liquidation or through a court decided exit. This is explained by the fact that stakeholder dependence increases the complexity of the exit decision and the exit procedure.


Firm exit Distress Court driven exit Voluntary liquidation Slack resources Stakeholders 



The authors would like to thank Antoon Lenaert (National Bank of Belgium), Cécile Buydens and Guy Delvaux (National Bank of Belgium) for their helpful cooperation with Sofie Balcaen’s doctoral research and provision of the requisite data. The authors also recognize the indispensable contributions of Richard Taffler, Cynthia Van Hulle, Koen Schoors, Charles Van Wymeersch, Didier Van Caillie and Wouter De Maeseneire. Further, the suggestions of two anonymous reviewers have contributed to the development of the paper. We gratefully acknowledge the financial assistance of the Ghent University Special Research Fund, the Hercules Fund, and of the Policy Research Center in Entrepreneurship and International Business.


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Copyright information

© Springer-Verlag 2010

Authors and Affiliations

  1. 1.Department of Accountancy and Corporate Finance, Faculty of Economics and Business AdministrationGhent UniversityGhentBelgium
  2. 2.Department of Accountancy and Corporate FinanceGhent UniversityGhentBelgium
  3. 3.Vlerick Leuven Ghent Management SchoolGhentBelgium

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