Thoughts on the Influence of Devastating Events with Prior Employers on Nascent Entrepreneurs: A Research on Japanese IPO Companies in or after 2001

Abstract

This article discusses the influence of work experience at corporations, which have gone through devastating events (“Events”), on start-up success. Founders and board members/auditors of companies newly listed on the Japanese stock exchange between 2001 and 2011 (“IPO companies”) have been reviewed. The work history data of such founders and board members/auditors are collected from IPO prospectus, and their former employers are categorized by types of Events such as “legal liquidation”, “voluntary liquidation”, “civil rehabilitation”, “restructuring” or “absorption type merger”. Statistical analysis shows that significantly more board members/auditors have work experience at “tosan” (a Japanese term commonly used to collectively mean “civil rehabilitation”, “legal liquidation”, “bankruptcy” and “voluntary liquidation”) corporations compared to those who have no such experience. On the other hand, work experience at “restructuring”, “merger”, “scandal” or “transform to holding company” corporations was negatively correlated to the number of board members/auditors of IPO companies. Company age was also negatively correlated.