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Cited by 1,739Firm Innovation and GrowthEntrepreneurship Studies and InfluencesCorporate Finance and Governance

Entry regulation as a barrier to entrepreneurship

Open access
Klapper, Leora, Laeven, Luc, Rajan, Raghuram·2006·Journal of Financial Economics
DOI 10.1016/j.jfineco.2005.09.006
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Crossref · 10.1016/j.jfineco.2005.09.006

Cites

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Claims the paper makes

2 of 17 cited sources checked · 0 supported · 0 flagged · accuracy not yet measured

  • Findingown data

    The difference in entry rates between retail trade and pulp/paper in the Czech Republic is 0.5 percentage points higher than the difference in entry rates between the same industries in Italy.

    “The coefficient estimate suggests that the difference in entry rates between retail and pulp in the Czech Republic (which is at the 25 th percentile in terms of EntCost with entry costs equal to 8% of per capita GNP) is 0.5 percentage points higher than the difference in entry rates between the same industries in Italy (which is at the 75 th percentile in terms of EntCost with entry costs equal to”
    Quote in the paperSubstantial claim
  • Findingown data

    The final sample includes 3,371,073 firms in 21 countries: Austria, Belgium, Bulgaria, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Italy, Latvia, Lithuania, the Netherlands, Norway, Poland, Romania, Spain, Sweden, and the United Kingdom.

    “Our final sample includes 3,371,073 firms in 21 countries: Austria, Belgium, Bulgaria, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Italy, Latvia, Lithuania, the Netherlands, Norway, Poland, Romania, Spain, Sweden, and the United Kingdom.”
    Quote in the paperSubstantial claim
  • Findingown data

    Four countries do not meet the coverage criteria: Iceland, Ireland, Luxembourg, and Portugal.

    “Four countries do not meet the criteria: Iceland, Ireland, Luxembourg, and Portugal.”
    Quote in the paperNot a substantial claim
  • Findingown data

    The results are robust to excluding transition countries.

    “Our results are robust to the exclusion of these countries.”
    Quote in the paperNot a substantial claim
  • Findingown data

    Entry rates across countries and industries using the Amadeus database and Eurostat data are significantly correlated at about 67%.

    “Entry rates across countries and industries using the Amadeus database and Eurostat data are significantly correlated at about 67%.”
    Quote in the paperNot a substantial claim
  • May combine two claims. 51
  • Classified as probably not a substantial claim. 30
  • The quote only partly states this claim. 4

  • May combine two claims.

    Premisecitation

    The average direct cost of fulfilling bureaucratic regulations for registering a new corporation in Italy is 20% of per capita GNP, compared to 10% of per capita GNP on average for other G-7 European countries.

    “Our findings suggest an explanation for the low level of incorporation in Italy: the average direct cost associated with fulfilling the bureaucratic regulations for registering a new corporation in Italy is 20% of per capita GNP compared to 10% of per capita GNP on average for other G-7 European countries.”
    Quote in the paperSubstantial claim1 of 1 sources checked
    • cites Djankov et al. (2002) source

      Table III (page unavailable) reports Italy’s direct entry cost as 24.74% of per capita GDP, not 20%. Its figures for the other European G-7 countries—France, Germany, and the United Kingdom—average about 9.6%, supporting the approximately 10% comparison. The paper uses GDP rather than GNP as the denominator. (LLM, conf=0.88)

      Experimental — accuracy not yet measured

  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Premisecitation

    Entry is higher in informationally opaque industries in Italian regions that have a more concentrated banking sector.

    “Di Patti and Dell'Ariccia (2004) find that entry is higher in informationally opaque industries in Italian regions that have a more concentrated banking sector.”
    Quote in the paperNot a substantial claim1 of 1 sources checked
    • cites Di Patti and Dell'Ariccia (2004) source

      The Conclusions report that competition is relatively more beneficial to firm birth in less opaque industries, consistent with the cited comparison. But the Economy-Wide Effect section finds a nonlinear relationship: for relatively opaque industries, firm birth rises with concentration only up to a point and then falls. The claim omits that qualification; the study also measures Italian provinces rather than regions. (LLM, conf=0.88)

      Experimental — accuracy not yet measured

  • May combine two claims.

    Findingown data

    Across all industries, firms start out larger when young in Italy, but grow more slowly so that firms in the United Kingdom are about twice as large by age ten.

    “Across all industries, firms start out larger when young in Italy, but grow more slowly so that firms in the United Kingdom are about twice as large by age ten (Figure 1).”
    • Also stated in: § 4.5 The consequences of preventing free entry · plain
      “Across all industries, firms start out larger when young in Italy, but grow more slowly so that firms in the United Kingdom are about twice as large by age ten.”
    Quote in the paperSubstantial claim

  • May combine two claims.

    Findingreasoning

    Entry costs matter most in richer countries, or countries that are not corrupt, where regulations on the books are more likely to be enforced.

    “Interestingly, they matter most in richer countries, or countries that are not corrupt, where the regulations on the books are more likely to be enforced.”
    Quote in the paperSubstantial claim
    • The authors state this as an assumption: Technological determinants of entry into an industry (such as minimum scale) carry over countries and are absorbed by industry indicators.
    • The authors state this as an assumption: Barriers to entry are low in the United States.
    • The authors state this as an assumption: The rank ordering of entry in the United States corresponds to the rank ordering of natural barriers across industries, and this rank ordering carries over to other countries.

  • May combine two claims.

    Findingown data

    The coefficient of the interaction term in the basic regression is negative and significant at the 1% level.

    “The coefficient of the interaction term is negative and significant at the 1% level.”
    Quote in the paperSubstantial claim

  • May combine two claims.

    Findingown data

    The results are robust to adding back Iceland, Ireland, Luxembourg, and Portugal and to dropping one country at a time.

    “Our results are also robust to adding back those countries that fail to meet our inclusion criteria (i.e., Iceland, Ireland, Luxembourg, and Portugal), and to dropping one country at a time (not reported in tables).”
    Quote in the paperNot a substantial claim

  • May combine two claims.

    Findingown data

    Environmental variables (financial development, labor regulation, protection of intellectual property) matter primarily for the rate of incorporation, and not for the size of entrants or the productivity growth of incumbents.

    “We find that these aspects of the business environment do matter, but primarily for the rate of incorporation, and not for the size of entrants or the productivity growth of incumbents.”
    Quote in the paperSubstantial claim
    • The authors state this as an assumption: Technological determinants of entry into an industry (such as minimum scale) carry over countries and are absorbed by industry indicators.
    • The authors state this as an assumption: Barriers to entry are low in the United States.
    • The authors state this as an assumption: The rank ordering of entry in the United States corresponds to the rank ordering of natural barriers across industries, and this rank ordering carries over to other countries.

  • May combine two claims.

    Findingown data

    The share of new corporations in Italy (the fraction of corporations that are one or two years old) is 3.8%, compared to 13.5% on average for France, Germany, and the United Kingdom.

    “Actually, the share of new corporations in Italy (the fraction of corporations that are one or two years old) is only 3.8% compared to 13.5% on average for France, Germany, and the United Kingdom.”
    Quote in the paperSubstantial claim

  • May combine two claims.

    Findingreasoning

    Value added per employee for older incumbents grows relatively more slowly in naturally high-entry industries in countries with costly bureaucratic barriers, while this effect is absent for young incumbents.

    “Value added per employee for older incumbents grows relatively more slowly in naturally high-entry industries in countries with costly bureaucratic barriers, although this effect is absent for young incumbents.”
    Quote in the paperSubstantial claim
    • The authors state this as an assumption: Technological determinants of entry into an industry (such as minimum scale) carry over countries and are absorbed by industry indicators.
    • The authors state this as an assumption: Barriers to entry are low in the United States.
    • The authors state this as an assumption: The rank ordering of entry in the United States corresponds to the rank ordering of natural barriers across industries, and this rank ordering carries over to other countries.

  • May combine two claims.

    Findingown data

    The results are robust to using instrumental variables with legal origin, although the magnitude of the coefficient estimate for the interaction term is somewhat reduced.

    “Column (vi) shows that the results are robust to using instrumental variables, although the magnitude of the coefficient estimate for the interaction term is somewhat reduced.”
    Quote in the paperSubstantial claim

  • May combine two claims.

    Findingown data

    The results in Table 7 are robust to excluding Italy and to excluding manufacture of communication equipment (NACE 32) and computer and related activities (NACE 72).

    “In particular, the results in Table 7 are also robust to (i) the exclusion of Italy, a developed country with relatively high entry barriers, and (ii) the exclusion of the following information technology-intensive industries: manufacture of communication equipment (NACE 32) and computer and related activities (NACE 72).”
    Quote in the paperSubstantial claim

  • May combine two claims.

    Findingown data

    The adverse interaction effects on growth are present primarily for older firms, and a likelihood ratio test confirms the difference in coefficients across the two samples.

    “They suggest that the adverse interaction effects on growth are present primarily for the older firms, and a likelihood ratio test confirms the difference in coefficients across the two samples.”
    Quote in the paperSubstantial claim

  • May combine two claims.

    Findingown data

    These aspects of the business environment have a significant impact, but primarily on the rate of incorporation and not on the productivity growth of incumbents.

    “We find that these aspects of the business environment have a significant impact, but primarily on the rate of incorporation and not on the productivity growth of incumbents.”
    Quote in the paperSubstantial claim

  • May combine two claims.

    Findingown data

    The correlation between entry rates in the U.S. and in the United Kingdom is 0.60 and significant at the 1% level.

    “Nevertheless, the correlation between entry rates in the U.S. and in the United Kingdom is 0.60 and significant at the 1% level.”
    Quote in the paperSubstantial claim

  • May combine two claims.

    Findingown data

    When estimating a regression with all interactions included in Table 11A, Column (iv), all variables retain their predicted effect and statistical significance except the financial development interaction.

    “When we estimate a regression with all the interactions included in Table 11A, Column (iv), we find that all variables retain their predicted effect and statistical significance except the financial development interaction”
    Quote in the paperNot a substantial claim
    • Rests on an assumption: Industry characteristics measured from U.S. data (external financial dependence, labor intensity, R&D intensity) are valid proxies for the same industry characteristics in other countries.

  • May combine two claims.

    Findingown data

    The interaction variable of R&D intensity and property rights is positive and significant.

    “In Table 11A, Column (iii), the interaction variable is positive and significant”
    Quote in the paperSubstantial claim
    • Rests on an assumption: Industry characteristics measured from U.S. data (external financial dependence, labor intensity, R&D intensity) are valid proxies for the same industry characteristics in other countries.

  • May combine two claims.

    Findingown data

    Higher entry costs accompany lower private credit to GDP, more stringent employee protection, and lower property rights protection.

    “Because the correlations in Table 11B suggest that higher entry costs accompany lower private credit to GDP, more stringent employee protection, and lower property rights protection”
    Quote in the paperNot a substantial claim
    • Rests on an assumption: Industry characteristics measured from U.S. data (external financial dependence, labor intensity, R&D intensity) are valid proxies for the same industry characteristics in other countries.

  • May combine two claims.

    Findingown data

    The main interaction variable between EntryUS and EntCost remains highly significant and virtually unchanged in magnitude when including the interaction with Informal.

    “However, our main interaction variable between EntryUS and EntCost remains highly significant and virtually unchanged in magnitude, suggesting that bureaucratic regulations have an independent effect over and above the effects of the inhospitable environment.”
    Quote in the paperSubstantial claim

  • May combine two claims.

    Findingown data

    Value added per worker grows relatively more slowly for older incumbents in naturally high-entry industries in countries with high bureaucratic barriers but not for young incumbents.

    “In sum, value added per worker grows relatively more slowly for older incumbents in naturally high-entry industries in countries with high bureaucratic barriers but not for young incumbents.”
    Quote in the paperSubstantial claim

  • May combine two claims.

    Findingown data

    Entry costs tend to be lowest in countries with Anglo-Saxon and Scandinavian legal origin and highest in countries with French legal origin.

    “Entry costs tend to be lowest in countries with Anglo-Saxon and Scandinavian legal origin and highest in countries with French legal origin.”
    Quote in the paperSubstantial claim

  • May combine two claims.

    Findingown data

    The correlation between entry rates in the U.S. and the average entry rate across Europe is 0.60 and significant at the 1% level.

    “The correlation between entry rates in the U.S. and the average entry rate across Europe is 0.60 and significant at the 1% level.”
    Quote in the paperSubstantial claim

  • May combine two claims.

    Findingown data

    When entry regulation is instrumented with legal origin, the coefficient estimate for the interaction term is highly significant, the same sign and approximately the same magnitude as in Table 7 Column (i).

    “When we instrument entry regulation with legal origin, we find that the coefficient estimate for the interaction term is highly significant, the same sign and approximately the same magnitude as shown earlier in Table 7 (Column (i) in Table 9).”
    Quote in the paperSubstantial claim

  • May combine two claims.

    Findingown data

    The coefficient estimate for the interaction between EntryUS and Informal is negative and statistically significant.

    “The coefficient estimate for the interaction between EntryUS and Informal is negative and statistically significant, suggesting that underreporting of new firms is more likely in high-entry industries in countries with an inhospitable business environment.”
    Quote in the paperNot a substantial claim

  • Probably not a substantial claim: may not pass S3 (load-bearing), S4 (based).

    Findingnone given

    The average real growth rate in value added per worker is 1%.

    “Since the average real growth rate in value added per worker is 1%, this is a sizeable magnitude.”
    Quote in the paperNot a substantial claim

  • May combine two claims.

    Findingown data

    When controlling for these other aspects of the business environment, entry regulations remain an important determinant of new firm entry and the growth of incumbent firms.

    “Importantly, when we control for these other aspects of the business environment, entry regulations remain an important determinant of new firm entry and the growth of incumbent firms.”
    Quote in the paperSubstantial claim
    • Rests on an assumption: Other regulations and aspects of the business environment could capture similar aspects of an unfavorable business environment as entry regulations.

  • May combine two claims.

    Findingown data

    The correlation between the informal sector measure (Informal) and the cost of entry regulations (EntCost) is 0.37, not statistically significant at the 10 percent level.

    “The correlation between our measure of the informal sector (Informal) calculated as the size of the informal economy as a percentage of official GNI averaged over the period 1999-2000 and the cost of entry regulations (EntCost) is 0.37 although not statistically significant at the 10 percent level.”
    Quote in the paperNot a substantial claim

  • May combine two claims.

    Findingown data

    Replacing EntryUS with EntryUS, 1990-2000 leaves the coefficient on the interaction term highly significant and of similar magnitude.

    “When we replace the EntryUS variables with EntryUS, 1990-2000, we find that the coefficient on the interaction term remains highly significant and of similar magnitude (Column (vii) in Table 8).”
    Quote in the paperNot a substantial claim

  • May combine two claims.

    Findingown data

    The coefficient estimate of the entry costs interaction remains statistically significant and of similar magnitude in Table 11A Column (iv) as in the baseline regression in Table 7, Column (i).

    “The coefficient estimate of the entry costs interaction remains statistically significant and of similar magnitude in Table 11 A Column (iv) as in the baseline regression in Table 7, Column (i).”
    Quote in the paperSubstantial claim
    • Rests on an assumption: Industry characteristics measured from U.S. data (external financial dependence, labor intensity, R&D intensity) are valid proxies for the same industry characteristics in other countries.

  • May combine two claims.

    Findingown data

    When the sample is restricted to small industries, the interaction coefficient remains strongly significant and of approximately the same magnitude as in Table 7 Column (iii).

    “When we restrict our sample to small industries, we still find a strongly significant interaction coefficient of approximately the same magnitude as shown earlier in Table 7 (Column (iii) in Table 9).”
    Quote in the paperSubstantial claim

  • Probably not a substantial claim: may not pass S1 (asserted), S3 (load-bearing), S4 (based). May combine two claims. The quote only partly states this claim.

    Findingown data

    In an instrumental variable regression using legal origin as instrument for entry regulations, the coefficient on EntryUS * EntCost is negative and significant at the 1% level (column i).

    “EntryUS * EntCost | -0.175***”
    Quote in the paperNot a substantial claim
    • Rests on an assumption: Legal origin is a valid instrument for entry regulations.
    • Rests on an assumption: U.S. industry entry rates are a valid benchmark for the industry's underlying entry potential in other countries.

  • May combine two claims. The quote only partly states this claim.

    Findingown data

    Including an interaction of industry-level entry and the share of the informal economy, the coefficient on EntryUS * EntCost is negative and significant at the 1% level, and the interaction with informal economy is negative and significant at the 1% level (column vii).

    “EntryUS * Informal | | | | | | | -0.057***”
    Quote in the paperSubstantial claim
    • Rests on an assumption: U.S. industry entry rates are a valid benchmark for the industry's underlying entry potential in other countries.

  • May combine two claims. The quote only partly states this claim.

    Findingown data

    Including an interaction of industry-level entry and log per capita GDP, the coefficient on EntryUS * EntCost is negative and significant at the 1% level, and the interaction with GDP per capita is positive and significant at the 1% level (column iv).

    “EntryUS * GDP per capita | | | | 0.419***”
    Quote in the paperSubstantial claim
    • Rests on an assumption: U.S. industry entry rates are a valid benchmark for the industry's underlying entry potential in other countries.

  • May combine two claims.

    Findingown data

    When estimating different slopes for low and high GDP per capita, the coefficient on EntryUS * EntCost is not significant for low GDP per capita countries, but is negative and significant at the 1% level for high GDP per capita countries (column v).

    “Low GDP per capita * EntryUS * EntCost | | | | | 0.087”
    • Also stated in: § Table 11B: Correlations between Regulatory Variables · plain
      “High GDP per capita * EntryUS * EntCost | | | | | -0.170***”
    Quote in the paperSubstantial claim
    • Rests on an assumption: U.S. industry entry rates are a valid benchmark for the industry's underlying entry potential in other countries.

  • May combine two claims.

    Findingown data

    Using Eurostat data, the coefficient on EntryUS * EntCost is negative and significant at the 1% level (column v).

    “EntryUS * EntCost | -0.175*** | | | -0.110*** -0.198*** |”
    Quote in the paperSubstantial claim
    • Rests on an assumption: U.S. industry entry rates are a valid benchmark for the industry's underlying entry potential in other countries.

  • May combine two claims.

    Findingown data

    When transition countries are excluded, the coefficient on EntryUS * EntCost remains negative and significant at the 1% level (column iv).

    “EntryUS * EntCost | -0.175*** | | | -0.110*** -0.198*** |”
    Quote in the paperNot a substantial claim
    • Rests on an assumption: U.S. industry entry rates are a valid benchmark for the industry's underlying entry potential in other countries.

  • May combine two claims.

    Findingown data

    For incumbent firms aged >5, the coefficient on EntryUS * EntCost is negative and significant at the 5% level; for firms aged 3-5, it is not significant.

    “EntryUS * EntCost -0.038 -0.396**”
    • Also stated in: § Additional information · plain
      “(0.281) (0.199)”
    Quote in the paperSubstantial claim
    • Rests on an assumption: U.S. industry entry rates are a valid benchmark for the industry's underlying entry potential in other countries.

  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Findingown data

    The likelihood ratio test of equality of all regression coefficients between age 3-5 and age >5 has a p-value of 0.001.

    “Likelihood ratio test of equality of all regression coefficients (p-value) 0.001***”
    Quote in the paperNot a substantial claim

  • May combine two claims.

    Findingown data

    When estimating different slopes for high and low corruption, the coefficient on EntryUS * EntCost is not significant for high corruption countries, but is negative and significant at the 1% level for low corruption countries (column vi).

    “High Corruption * EntryUS * EntCost | | | | | | 0.186”
    • Also stated in: § Table 11B: Correlations between Regulatory Variables · plain
      “Low Corruption * EntryUS * EntCost | | | | | | -0.168***”
    Quote in the paperSubstantial claim
    • Rests on an assumption: U.S. industry entry rates are a valid benchmark for the industry's underlying entry potential in other countries.

  • May combine two claims.

    Findingown data

    The entry regulation interaction continues to enter negatively and is statistically significant and with a similar order of magnitude as the regressions reported in Table 10.

    “Importantly, the entry regulation interaction continues to enter negatively and is statistically significant and with a similar order of magnitude as the regressions reported in Table 10.”
    Quote in the paperSubstantial claim
    • Rests on an assumption: Industry characteristics measured from U.S. data (external financial dependence, labor intensity, R&D intensity) are valid proxies for the same industry characteristics in other countries.

  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Findingown data

    The Wald test of equality of slope coefficients between age 3-5 and age >5 has a p-value of 0.300.

    “Wald test of equality of slope coefficients (p-value) 0.300”
    Quote in the paperNot a substantial claim

  • May combine two claims.

    Findingown data

    In Tobit regressions of the fraction of new firms, the coefficient on EntryUS * EntCost&Time is negative and significant at the 1% level (column iii).

    “EntryUS * EntCost&Time | | | -0.211***”
    Quote in the paperSubstantial claim
    • Rests on an assumption: U.S. industry entry rates are a valid benchmark for the industry's underlying entry potential in other countries.

  • May combine two claims.

    Findingown data

    In Tobit regressions of the fraction of new firms, the coefficient on EntryUS * EntProc is negative and significant at the 1% level (column ii).

    “EntryUS * EntProc | | -0.656***”
    Quote in the paperSubstantial claim
    • Rests on an assumption: U.S. industry entry rates are a valid benchmark for the industry's underlying entry potential in other countries.

  • May combine two claims. The quote only partly states this claim.

    Findingown data

    Including an interaction of industry-level U.S. entry and the country-average entry rate, the coefficient on EntryUS * EntCost remains negative and significant at the 1% level, while the interaction with country-average entry is not significant (column ii).

    “EntryUS * Country-average Entry | | 2.730”
    Quote in the paperNot a substantial claim
    • Rests on an assumption: U.S. industry entry rates are a valid benchmark for the industry's underlying entry potential in other countries.

  • Classified as probably not a substantial claim.

    Study design and conductnone given

    The inclusion criteria create the most comparable sample of firms across countries.

    “We believe that our inclusion criteria create the most comparable sample of firms across countries, but we should be cautious about deriving strong conclusions from direct cross-country comparisons.”
    Quote in the paperSubstantial claim

  • May combine two claims.

    Interpretationown data

    The lower growth of older incumbents in high-entry industries in high-barrier countries is consistent with entry regulations indiscriminately screening out small young firms and inhibiting the disciplinary effects of competition.

    “consistent with the hypothesis that entry regulations indiscriminately screen out small young firms and inhibit the disciplinary effects of competition.”
    Quote in the paperSubstantial claim
    • The authors state this as an assumption: Technological determinants of entry into an industry (such as minimum scale) carry over countries and are absorbed by industry indicators.
    • The authors state this as an assumption: Barriers to entry are low in the United States.
    • The authors state this as an assumption: The rank ordering of entry in the United States corresponds to the rank ordering of natural barriers across industries, and this rank ordering carries over to other countries.

  • Classified as probably not a substantial claim.

    Study design and conductreasoning

    Deleting firms that report only consolidated statements avoids double-counting firms and subsidiaries or operations abroad.

    “Next we delete from our sample firms that report only consolidated statements, to avoid doublecounting firms and subsidiaries or operations abroad.”
    Quote in the paperSubstantial claim

  • May combine two claims.

    Study design and conductreasoning

    Excluding non-limited-liability legal forms improves comparability because limited liability is a common benefit and coverage of corporations is extensive and best available.

    “Finally, we exclude all legal forms other than the equivalent of public and private limited liability corporations.2 In particular, we exclude proprietorships and partnerships.”
    • Also stated in: § 2.2 Sample selection · plain
      “However, most European countries require all limited liability corporations to file financial statements, which makes the coverage for corporations extensive and the best available.”
    Quote in the paperSubstantial claim

  • May combine two claims.

    Study design and conductreasoning

    Restricting the sample to 1998 and 1999 ensures comparability because efforts to expand coverage in 1998 made prior data less comparable.

    “A second reason is that efforts were made in 1998 to expand the coverage for Central and Eastern European countries allowing us to include more countries, but making the prior data less comparable.”
    Quote in the paperSubstantial claim

  • May combine two claims.

    Interpretationreasoning

    Entry regulations discourage small firms from setting up and force other firms to grow without limited liability until they reach a scale that makes incorporation affordable.

    “This means that not only do such regulations discourage small firms from setting up, they also force others to grow without the protection of limited liability until they reach a scale that makes the cost of incorporation affordable.”
    Quote in the paperSubstantial claim
    • The authors state this as an assumption: Technological determinants of entry into an industry (such as minimum scale) carry over countries and are absorbed by industry indicators.
    • The authors state this as an assumption: Barriers to entry are low in the United States.
    • The authors state this as an assumption: The rank ordering of entry in the United States corresponds to the rank ordering of natural barriers across industries, and this rank ordering carries over to other countries.

  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Study design and conductown data

    The results are not qualitatively affected by including firms under one year old as new firms.

    “We check that the results are not qualitatively affected by including firms under one year old as new firms.”
    Quote in the paperNot a substantial claim

  • Probably not a substantial claim: may not pass S3 (load-bearing), S4 (based).

    Study design and conductnone given

    The results are robust to measures based on entry in other regions.

    “We do, however, check the robustness of the results to measures based on entry in other regions.”
    Quote in the paperNot a substantial claim

  • Probably not a substantial claim: may not pass S4 (based).

    Study design and conductnone given

    The industry share of total sales captures an industry-specific convergence effect, correcting for the possibility that sectors large relative to the economy experience lower entry rates.

    “The industry j share of total sales in country k captures an industry-specific convergence effect: we correct for the possibility that sectors that are large relative to the rest of the economy experience lower entry rates.”
    Quote in the paperNot a substantial claim

  • Classified as probably not a substantial claim. May combine two claims.

    Study design and conductreasoning

    Excluding firms less than one year old avoids frivolous filings and differences in initial filing requirements across countries.

    “We require firms to survive at least one year and exclude firms in year 0. We exclude firms less than one year old to avoid frivolous filings and because of the difference in initial filing requirements across countries.”
    Quote in the paperSubstantial claim

  • Probably not a substantial claim: may not pass S3 (load-bearing), S4 (based).

    Interpretationreasoning

    Entry barriers are likely to be more onerous for small firms where founders complete all procedures themselves.

    “This means the entry barriers are likely to be more onerous for small firms where this latter assumption is likely to be true.”
    Quote in the paperNot a substantial claim

  • May combine two claims.

    Study design and conductown data

    The empirical results are qualitatively robust to defining new firms as age one or using entry rates for one year only.

    “Our empirical results are qualitatively robust to defining new firms as age equal to one or to using entry rates calculated for one year (1998 or 1999) only.”
    Quote in the paperNot a substantial claim

  • Classified as probably not a substantial claim. May combine two claims.

    Study design and conductreasoning

    The basic test examines within-country differences across countries and will not be affected unless there are systematic biases in reporting industries within a country.

    “However, even if we have not eliminated all biases between countries, our basic test examines within-country differences across countries, and will not be affected unless there are systematic biases in reporting industries within a country.”
    Quote in the paperSubstantial claim

  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Study design and conductown data

    Results are similar when using value added rather than sales as a measure of relative industry size.

    “We get similar results when we use value added rather than sales as a measure of relative industry size, but prefer to use sales as a measure of size because value added figures are missing for several industries in a number of countries.”
    Quote in the paperNot a substantial claim

  • Probably not a substantial claim: may not pass S3 (load-bearing), S4 (based).

    Study design and conductreasoning

    The qualitative results hold when new firms with more than 250 employees are excluded.

    “Since new firms in this largest category are likely to be existing firms that reincorporate following a merger or acquisition, we check that our qualitative results hold when we exclude new firms with more than 250 employees.”
    Quote in the paperNot a substantial claim

  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Premisecitation

    The absence of regulations protecting investors could be a very effective barrier to new firm creation.

    “In fact, Rajan and Zingales (2003) suggest that the absence of regulations protecting investors could be a very effective barrier to new firm creation.”
    Quote in the paperNot a substantial claim0 of 1 sources checked
    • cites Rajan and Zingales (2003) source

  • Probably not a substantial claim: may not pass S3 (load-bearing). May combine two claims.

    Interpretationreasoning

    These correlations could all be aspects of an unfavorable business environment (or good institutions tend to go together).

    “these could all be aspects of an unfavorable business environment (or, put another way, good institutions tend to go together).”
    Quote in the paperNot a substantial claim
    • Rests on an assumption: Industry characteristics measured from U.S. data (external financial dependence, labor intensity, R&D intensity) are valid proxies for the same industry characteristics in other countries.

  • May combine two claims.

    Interpretationown data

    The regulation of entry seems to have causal effects, more so in wealthy countries or countries that are not corrupt than in poor or corrupt countries.

    “Taken together, these results suggest that the regulation of entry seems to have causal effects, more so in wealthy countries or countries that are not corrupt than in poor or corrupt countries.”
    Quote in the paperSubstantial claim

  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Premisecitation

    Industries with higher dependence on trade credit financing exhibit higher growth rates in countries with relatively weak financial institutions.

    “Fisman and Love (2003a) focus on access to trade credit rather than bank credit and find that industries with higher dependence on trade credit financing exhibit higher growth rates in countries with relatively weak financial institutions.”
    Quote in the paperNot a substantial claim0 of 1 sources checked
    • cites Fisman and Love (2003a) source

  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Premisecitation

    Prior studies find that the relation between industry characteristics and industry turnover patterns is stable over time.

    “Dunne and Roberts (1991) and Cable and Schwalbach (1991) study U.S. and international data, respectively, and find that the relation between industry characteristics and industry turnover patterns is stable over time.”
    Quote in the paperNot a substantial claim0 of 2 sources checked
    • cites Dunne and Roberts (1991)

      Couldn’t be matched to a paper in Crossref, so it can’t be checked.

    • cites Cable and Schwalbach (1991)

      Couldn’t be matched to a paper in Crossref, so it can’t be checked.

  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Premisecitation

    Financial development following bank deregulation fostered firm entry in the United States.

    “Black and Strahan (2002) find that financial development following bank deregulation fostered firm entry in the United States.”
    Quote in the paperNot a substantial claim0 of 1 sources checked
    • cites Black and Strahan (2002) source

  • Probably not a substantial claim: may not pass S3 (load-bearing), S4 (based). May combine two claims.

    Interpretationnone given

    Low credit, high labor regulation, or low protection of property rights could particularly affect young firms.

    “While low credit, high labor regulation, or low protection of property rights could particularly affect young firms”
    Quote in the paperNot a substantial claim

  • May combine two claims.

    Premiseown data

    These data improve upon previously used datasets in that they include a large number of private, unlisted, and publicly traded corporations and all sectors (i.e., not limited to manufacturing).

    “These data improve upon previously used datasets in that they include (1) a large number of private, unlisted, and publicly traded corporations and (2) all sectors (i.e., not limited to manufacturing).”
    Quote in the paperSubstantial claim

  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Interpretationreasoning

    The findings of Rajan and Zingales (1998) are not exactly the same as the paper's findings, since new establishments need not be new entry but could simply be new plants set up by existing firms.

    “This is not exactly the same as our findings, since new establishments need not be new entry but could simply be new plants set up by existing firms.”
    Quote in the paperNot a substantial claim

  • May combine two claims.

    Interpretationreasoning

    Small firms are dissuaded from entering or have to grow without the protection of limited liability until they can afford the costs of incorporation.

    “suggesting that small firms are dissuaded from entering or have to grow without the protection of limited liability until they can afford the costs of incorporation.”
    Quote in the paperSubstantial claim
    • Rests on an assumption: Industry characteristics measured from U.S. data (external financial dependence, labor intensity, R&D intensity) are valid proxies for the same industry characteristics in other countries.
    • Rests on an assumption: Legal origin of the country is a valid instrument for entry cost.

  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Study design and conductown data

    The results do not alter when the GmbH & Co KG legal form is included.

    “The results do not alter when we include the latter.”
    Quote in the paperNot a substantial claim

  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Premisecitation

    Rajan and Zingales (1998) find that there are more new establishments in industrial sectors with greater external financing needs in more developed financial systems.

    “Rajan and Zingales (1998) find that there are more new establishments in industrial sectors with greater external financing needs in more developed financial systems.”
    Quote in the paperNot a substantial claim0 of 1 sources checked
    • cites Rajan and Zingales (1998)

      Couldn’t be matched to a paper in Crossref, so it can’t be checked.

  • Probably not a substantial claim: may not pass S2 (checkable), S3 (load-bearing).

    Interpretationown data

    There could well be offsetting effects of other constraints to entry.

    “In sum, there could well be offsetting effects of other constraints to entry as hypothesized above”
    Quote in the paperNot a substantial claim
    • Rests on an assumption: Industry characteristics measured from U.S. data (external financial dependence, labor intensity, R&D intensity) are valid proxies for the same industry characteristics in other countries.

  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Study design and conductnone given

    Due to lags in data collection, the coverage for the year is incomplete.

    “Due to lags in data collection, the coverage for the year is incomplete.”
    Quote in the paperNot a substantial claim

  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Premisenone given

    Except for Scarpetta et al. (2002), none of the other cited papers also examine entry regulations.

    “Except for the work by Scarpetta et al. (2002), none of these other papers also examine entry regulations.”
    Quote in the paperNot a substantial claim0 of 1 sources checked
    • cites Scarpetta et al. (2002)

      Couldn’t be matched to a paper in Crossref, so it can’t be checked.

  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Premisecitation

    Johnson et al. (2002) find lower investment by entrepreneurs in countries with weak property rights.

    “Using survey data from five transition countries on the reinvestment of profits by entrepreneurs, Johnson et al. (2002) find lower investment by entrepreneurs in countries with weak property rights.”
    Quote in the paperNot a substantial claim0 of 1 sources checked
    • cites Johnson et al. (2002) source

  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Premisecitation

    Kumar, Rajan, and Zingales (2002) find that the average size of firms in human capital and in R&D intensive industries is larger in countries that protect property rights and patents.

    “Kumar, Rajan, and Zingales (2002) find that the average size of firms in human capital and in R&D intensive industries is larger in countries that protect property rights and patents.”
    Quote in the paperNot a substantial claim0 of 1 sources checked
    • cites Kumar, Rajan, and Zingales (2002)

      Couldn’t be matched to a paper in Crossref, so it can’t be checked.

  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Premisecitation

    Claessens and Laeven (2003) find that growth of industries that rely on intangible assets is disproportionately lower in countries with weak intellectual property rights.

    “Claessens and Laeven (2003) find that growth of industries that rely on intangible assets is disproportionately lower in countries with weak intellectual property rights.”
    Quote in the paperNot a substantial claim0 of 1 sources checked
    • cites Claessens and Laeven (2003) source
76 of 76

  • The authors state this as an assumption.

    Technological determinants of entry into an industry (such as minimum scale) carry over countries and are absorbed by industry indicators.

    “We assume these determinants carry over countries and are absorbed by industry indicators.”

  • The authors state this as an assumption.

    Barriers to entry are low in the United States.

    “Under the assumption that these barriers are low in the United States”

  • The authors state this as an assumption.

    The rank ordering of entry in the United States corresponds to the rank ordering of natural barriers across industries, and this rank ordering carries over to other countries.

    “Nevertheless, all that is important for us is that the rank ordering of entry in the United States correspond to the rank ordering of natural barriers across industries, and that this rank ordering carry over to other countries.”

  • The authors state this as an assumption.

    The error term has the usual distributional assumptions.

    “Finally, k j, ε is an error term with the usual distributional assumptions.”

  • The paper relies on this without support.

    Industry shares of total sales capture a potential convergence effect.

    “These industry shares of total sales are expected to capture a potential convergence effect.”

  • The paper relies on this without support.

    The method works so long as entry rates are measured in a country where barriers to entry are thought to be small.

    “Our method should work so long as we measure entry rates in a country where barriers to entry are thought to be small.”

  • The paper relies on this without support.

    Small industries are unlikely to be responsible for entry barriers because they have limited political clout.

    “These industries are unlikely to be responsible for the entry barriers since they have limited political clout.”

  • The paper relies on this without support.

    More developed countries have better-developed information systems, product inspections, quality control, contract and law enforcement, and consequently an entrepreneurial population less inclined to misbehavior.

    “More developed countries have better-developed information systems, better product inspections and quality control, better contract and law enforcement, and consequently, an entrepreneurial population less inclined to misbehavior.”

  • The authors state this as an assumption.

    The richer infrastructure gives the population more incentive to behave, so there is less need for screening.

    “(The underlying population in wealthier countries might also be socialized to be more honest (less adverse selection) but for our purposes it is only necessary that the richer infrastructure gives them more incentive to behave, so there is less need for screening.)”

  • The paper relies on this without support.

    In countries where tax avoidance and other reasons make informality attractive, there is less entry into the formal sector and fewer firms choosing the legal form of a limited liability company.

    “In countries where for tax avoidance and other reasons it is attractive to remain informal, we expect to see less entry into the formal sector and fewer firms choosing the legal form of a limited liability company.”

  • The paper relies on this without support.

    Entry regulations can be thought of as a fixed cost.

    “Entry regulations, at least in the way we measure them, could be thought of as a fixed cost.”

  • The paper relies on this without support.

    Other regulations and aspects of the business environment could capture similar aspects of an unfavorable business environment as entry regulations.

    “To the extent that onerous entry regulations go together with lower financial development, more stringent employee protection, and lower property rights protection, they could all capture similar aspects of an unfavorable business environment.”

  • The paper relies on this without support.

    Industry characteristics measured from U.S. data (external financial dependence, labor intensity, R&D intensity) are valid proxies for the same industry characteristics in other countries.

    “The industry variable measured from U.S. data, R&D, is a measure of dependence on research and development and equals the industry-level median of the ratio of research and development expenses to sales for Compustat firms in the same industry over the period 1990-99.”

  • The paper relies on this without support.

    Legal origin of the country is a valid instrument for entry cost.

    “We use legal origin of the country as instrument for entry cost.”

  • The paper relies on this without support.

    Legal origin is a valid instrument for entry regulations.

    “In column (i), we use the legal origin variable in La Porta et al. (1998) as instrument for entry regulations.”

  • The paper relies on this without support.

    U.S. industry entry rates are a valid benchmark for the industry's underlying entry potential in other countries.

    “EntryUS is the ratio of new firms to total firms in the U.S., by two-digit NACE industry code(Dun & Bradstreet).”
16 of 16

Self-check

Percentages, sums and reported differences re-computed from the paper’s own numbers.

Each contradiction between two passages listed here was confirmed by an independent check.

  • Labor intensity has conflicting denominators and periods

    Major

    The methodology defines LabInt as employees divided by fixed assets using 1998-99 data. Its appendix definition instead divides employees by value added and uses 1990-99 data.

  • Exit is defined using different events

    Major

    The results section counts closures or acquisitions as exits, but Appendix 3 defines exit as following formal bankruptcy proceedings. Those definitions do not describe the same set of events.

  • Scale is assigned incompatible calculation periods

    Minor

    Table 10 says Scale averages data from 1998-99, but the appendix says it is computed from firms in 1995.

  • Two U.S. entry rates are given for NACE 74

    Minor

    Table 4 reports a U.S. entry rate of 6.46% for other business activities, whereas Appendix 3 reports 9.65% for the same NACE code and industry.

  • Estonia exceeds the stated highest entry rate

    Minor

    The text names Lithuania as having the highest entry rate at 19.2%, but Table 3 reports 20.41% for Estonia.

5 of 5

Cites

Flagged first, then by citations

2 of the 37 references couldn’t be matched to a known paper.

Cited by

Sorted by citations

Related

Authors
Klapper, L., Laeven, L., & Rajan, R.
Affiliations
  • World Bank (US)
  • International Monetary Fund (US)
Corresponding author
Rajan, Raghuram
ORCID
Venue
Journal of Financial Economics
Publisher
Elsevier BV
Published
2006-12
Volume
82
Issue
3
Pages
591-629
ISSN
0304-405X (ISSN-L)
DOI
10.1016/j.jfineco.2005.09.006
OpenAlex
W2116184502
Semantic Scholar
9d0b23dbb25f3706b54859728f416d6b628f66df
Cited by
1,723
References
37
Citations by year
2026: 89 · 2025: 91 · 2024: 77 · 2023: 89 · 2022: 96 · 2021: 109 · 2020: 113 · 2019: 94 · 2018: 93 · 2017: 101 · 2016: 79 · 2015: 100 · 2014: 95 · 2013: 135 · 2012: 70
FWCI
119.39
Type
journal article
Language
en
Open access
Licence
www.elsevier.com/tdm/userlicense/1.0/ (tdm)
Locations
  • Journal of Financial Economics (publishedVersion)
  • Research portal (Tilburg University) (publishedVersion)
  • RePEc: Research Papers in Economics (submittedVersion)
  • Data Archiving and Networked Services (DANS) (submittedVersion)
Topics
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Firm Innovation and Growth
  • Social Sciences › Business, Management and Accounting › Management of Technology and Innovation › Entrepreneurship Studies and Influences
  • Social Sciences › Business, Management and Accounting › Accounting › Corporate Finance and Governance
Keywords
entry regulation, entrepreneurship, startups, firm size, barriers to entry, European firms, intellectual property protection, labor regulation, access to finance

About these checks

Registry, retraction, Cites and statistics results are computed, not judged, with one exception: a printed reference that no index lists is read once by a model before it counts as a citation error. Claims are extracted by a model and kept only when their quote appears verbatim in the text; each cited source is then checked, with a model’s help, for whether it says what the claim relies on. Those verdicts can be wrong — read the claim’s quote and the cited source before relying on one.

Claims read by deepseek-v4.1-flash under definition version 3 (extract-v3) on 2026-10-11.

Classified by jev-1.13-20260917 (gold-guideline-v0.2) on 2026-10-11.

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