ABSTRACT
Business failures are viewed here as a life and death process. Traditionally, these processes have been extensively studied by actuaries when designing mortality and life tables used by insurance companies throughout the world. The basic tool used in building such tables is called survival analysis (Abramowitz, 1965; Johnson and Elandt-Johnson, 1980; Johnson and Kotz, 1970). This chapter presents a simplified version of this theory and its application to the analysis of business mortality (failure). In particular, we study the following topics:
In most types of businesses the early years are the most difficult and time mortality is highest.
Generally, the longer the business survives, other things being equal, the smaller its probability of failure.
Mortality rates differ among business types.
