Entrepreneurs strongly affect firm performance. We use deaths of several hundred entrepreneurs as a source of exogenous variation, and find large and sustained effects of entrepreneurs at all levels of the firm performance distribution. Entrepreneurs strongly affect performance of both very young firms and for more mature firms, which suggests that liquidity constraints due to ’founder specificity’ may last well into a firm’s life. The negative effects of founder death are predominantly driven by entrepreneurs that work full time in their firms. Overall, our results suggest that entrepreneurs play a large role in affecting financial constraints and firm performance. |
