ABSTRACT
We study the impact of a set of industry, firm- and e-commerce-related factors on Internet firm survival. Through the use of one age-based and another calendar time-based Bayesian dynamic model, we are able to examine how the impact of these factors changes over time. Our results are based on data from 115 publicly-traded Internet firms and suggest that Internet firm survival depends on different factors at the different stages in their lifetimes. Early on, an Internet firm's likelihood of survival will be higher when the initial public offerings rate of Internet stocks in the market is high and when the firm has abundant financial capital. As firms grow, their survival is increasingly contingent on their financial capital and size. Our empirical results show that from the beginning of 2001 to the end of 2002, Internet firms experienced increasing pressure on survival from their debts and from labor expenses to pay its senior executives. In addition, Internet firms start to compete based on size in late 2002 as the sector grew. We obtained these findings using new econometric methods from Bayesian statistics.
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