06.04.2023 09:03
research results
The lifespan of German companies is twelve years on average. This is what scientists at the Institute for Economics at the University of Rostock found out. The working group analyzed data from more than one million companies from the business register at the research data center of the federal and state governments.
“By studying mathematics at the University of Rostock, I received a universal tool as a basis for my scientific work,” says Anne-Marie Toparkus, doctoral student at the Chair of Statistics and Econometrics at the University of Rostock. Her research is about the average lifespan of companies. In order to calculate this, the Rostock working group led by Professor Rafael Weißbach developed a model that determined the average lifespan of companies from the dates when they were founded and closed. The result is twelve years. The findings of Anne-Marie Toparkus also show that no strong increase in the life expectancy of companies can be proven. So it stays at an average of twelve years. However, regional differences have been proven, for example southern German companies live a year longer than northern German ones. This came out as part of a master’s thesis that Anne-Marie Toparkus recently supervised.
“One type of closure that is particularly easy to record is insolvency, which is why I pay attention to the lifespan of insolvent companies,” explains Anne-Marie Toparkus, who completed her master’s degree in business mathematics at the top of her class. The methodology for data evaluation is complicated, confirms Professor Weißbach, who is a mathematician by training. In comparison, the average life expectancy of humans would be easier to calculate. “Because birth is clearly recorded in a register, and death is also documented.” This is more difficult for companies.
One starting point, however, is the closure rate, i.e. the ratio of companies closed within a year to the total number of existing companies. “If about five percent of the companies are closed within a year, companies survive on average twenty years,” explains Rafael Weißbach. Corporate insolvencies are very easy to collect because insolvencies are filed with the court and – to protect creditors – are published. The problem, however, is the stock of companies. For this purpose, the working group uses a statistical estimation method that was already proposed in the 1940s.
The findings of the Rostock researchers are not only interesting for the economy itself. “Investors must also be aware of the risk of insolvency for the companies to which they lend money – implicitly through banks or explicitly through the purchase of corporate bonds,” explains Rafael Weißbach. In his opinion, the management of every company must also keep this risk in mind, even in loan negotiations with the banks. Weißbach also sees social aspects: “Students who don’t end up in the public sector should think about which company they start their career in.” After all, every employee has to deal with the question again and again: Will my current employer leave at some point to bankruptcy? Therefore, the study is also a pointer to constantly gain further qualifications in order to remain attractive for the job market and other companies.
Text: Wolfgang Thiel
Scientific contact person:
University of Rostock
Prof. Dr. Rafael Weissbach
The Faculty of Economic and Social Sciences
Chair of Statistics and Econometrics
Telephone: +49 (0)381 / 498-4428 (4429 Sec.)
Fax: +49 (0)381 / 498-4401
E-Mail: [email protected]
