determinants of business ownership. Instead, we examine the determinants of several
business outcomes, such as closure rates, sales, profits, and employment size, conditional
The sample used below includes firms that meet a minimum weeks and hours
restriction. Specifically, at least one owner must report working for the business at least
12 weeks in 1992 and at least 10 hours per week.6 The weeks and hours restrictions are
imposed to rule out very small-scale business activities such as casual or side-businesses
owned by wage/salary workers. In multi-owner firms, which represent 20.6 percent of
the sample, we identify one person as the primary owner of the business. The primary
owner is identified as the owner working the most annual hours in 1992 (weeks*hours).
In the case of ties, we identify the primary owner as the person who founded the business.
Finally, all remaining ties are resolved by assigning a random owner. The primary
business owner is used to identify all owner characteristics of the firm, such as marital
status, education, prior work experience, and family business background. The race and
sex of the firm, however, are identified by majority ownership, which is the method used
by the Survey of Minority Owned Business Enterprises (U.S. Department of Commerce
t o S c o r p o r a t i o n s d u e t o c h a n g e s i n t a x l a w s ( H e a d d 1 9 9 9 ) . 6 7 This restriction excludes 22.1 percent of firms in the original sample. The race of the primary owner is not available in the CBO, and the sex of the owner had many missing values.