Voluntary firm exits and inter-firm transaction networks in an ageing society

Abstract This study investigates voluntary firm exits, focusing on the role of partner exits within inter-firm transaction networks in ageing Japan. Utilising comprehensive firm-level data covering over one million Japanese firms from 2007 to 2022, we find that firms led by older CEOs exhibit higher voluntary exit rates and more long-lasting inter-firm relationships. Further, one firm’s voluntary exit significantly correlates with voluntary exits by business partners, and this is particularly pronounced in peripheral regions characterised by sparse networks, where firms have fewer opportunities to form new partnerships. Accordingly, relationship stickiness is a crucial factor intensifying the difficulties firms face when adapting to partner exits.