Summary of the Paper
The ‘Business Failures by Industry in the United States’ by Gary Richardson and Michael Gou is an informative research paper that details on data relating to the business failures that have occurred for the period between 1895 and 1940. The paper is unique in that it does this using the lowest level of aggregation in length, breadth and depth that no other scholar has ever provided as far as data relating to business failure during this period is concerned. The information has dominantly been drawn from the works of R.G. Dun and Company and its successor, Dun, and Bradstreet. Richardson and Gou’s paper, through its non-aggressive and disintegrated data tables, clearly evidences the fact that business failures fall during expansions and rise during recessions. By disintegrating and categorizing the information into different divisions in a series of tables, the paper resurrects the work done by the two information registering companies that ended in the late 1930s.
The fact that the paper highlights the laws relating to the publishing of information relating to business failure and their amendments cannot be ignored. This is an important research element as the legal environment has a major effect on the economic environment that the paper is based. The paper reconstructs the data series archived by the Dun Company relating to business failures in the period above by transforming the raw data and coming up with a tabulated explanatory series. The tabulated business failure explanatory series reconstruct data from the Dun Company and present it in a more comprehensive manner and makes it accessible in categories such as level of the month, a branch of business and division of industry. In my opinion, the paper is clearly and considerably easy to read. The next section, however, highlights some issues that the author still needs to deal with.
Main Comments and Suggestions
One of the main issues in this paper is the failure to discuss the rates of business failure. The rates of business failure by industry in the United States for the period between 1895 and 1939 could have form an important part of Richardson and Gou’s research considering that their report is intended to provide a statistical history. Provision of rates to the reader could have simplified the seemingly complicated data to lay-data-consumers. The report could have been more appealing had Richardson and Gou summed up the rates of business failure with predetermined periods say quarterly, semi-annually, annually or even after every decade. This is a very important section that was left out. To calculate the rate of business failure for a given period, the researchers could have used the already disintegrated tables and source for data relating to some failures and number of active firms. The ratio of some failures is to the number of active firms could have provided the business failure rate after every preset period. In economic research, data presentation forms an important part of the research as it determines the national as well as the international impact that the paper is likely to have in the real business world. Presenting the information in the form of rates and percentages could have made it easily synthesizable hence compelling a major impact. Some readers may be forced to avoid the paper due to the jargon-like nature of the data presentation section. Charts and other types of smart art could be used to improve the data presentation section rather than over-relying on the tables.
The paper’s flow of the legal provisions relating to business failure for the period between 1895 and 1939 has been well discussed in chronological order from enacting the Bankruptcy Act of 1898 through to the section 77B’s amendments made in the mid-1930s (Richard and Michael, 3). Even so, this historical discussion is wrongly placed. It interferes with the papers introductory flow. It just makes the introduction too cumbersome to comprehend and begins to draw the reader out of the introductory context. Proper integration of the legal changes would not have caused any reading difficulties but developing some historically oriented paragraphs at the end of the introduction may lead to the loss of readers at this point. If at all such history is to be included in the introduction section, it should be done in such a manner that hints relating to its inclusion are made at the preliminary paragraphs of the section. Alternatively, information relating to the legal provisions can be provided in close relation and combination with other introductory information. In another alternative, the authors could have placed such information in its subsection just below the introductory paragraph. Failure to do so complicates the reader’s ability to comprehend the intended introductory information. It is important for the authors to note that the main intention of the opening section of the paper is to acquire at least 90% of the reader’s attention failure to which the rest of the information may be rendered useless. The paper, despite being academic, had only 116 pages implying that a two-page introductory section would have been sufficient.
Besides, to the above issues is a structural issue where the presentation section is seen to dominate over the theoretical section. Even if the majority of the papers have the theoretical part dominating the presentation part, there is no problem with having the vice versa as it is the case for this paper. The paper has calibrated real data relating to business failures in the US for the period between 1895 and 1935 for better quantitative results. All these efforts have led to the betterment of the paper and the affirmation of its thesis. However, the paper fails to use more than tables in its presentation. It is likely that this is beyond the scope of the paper, but graph and charts could have placed the reader in a better position to interpret the results especially when such readers are interested with integrated wholesome views. The disintegration of information at the level of the month, a branch of business and division of industry and their placement in tables is a major step towards the interpretation of the previously poorly and primitively presented information but does not get to the extent to ensure convenient understandability by the readers. One form of presentation, tables, for all explanations relating to the series is doubtlessly monotonous. It is, therefore, recommended that the authors adopt other styles to the benefit of the reader, their work and interested persons who might not be in a position to understand tabulated data but well conversant with other forms of data presentation. Further, it is not easy for scholars to source conclusive data from tables as it is in other forms of data presentation.
The topic of the paper is ‘Business Failures by Industry in the United States, 1895 to 1939: A Statistical History’. Unfortunately, the author seems to minimize the discussion section that should provide an argument relating to this topic and maximizes on mere presentation and other subtopics that provide a foundation for the main topic. In other words, the main topic and the relevance of the empirical results on this topic have been discussed briefly rather than in details as it should be the case. The author seems to major on the legal framework and the legal amendments that were made in the period between 1895 and 1939 when the business failures occurred. The legal framework and its amendments should be discussed briefly so that the author leaves enough room for the discussion of the main topic and the implications of the results. Further, the paper majors on data sources and their definitions at the expense of provision of a comprehensive discussion of business failures in the United States and the implications of the results. The authors move on to major on the methods they used to reconstruct the primitive Dun’s data series to their advanced, modernized and conveniently comprehensible series. There is nothing wrong with having the data sources and the methods used for reconstruction defined. The problem begins when the author majors on the same. Alternatively, the author should have chosen a different topic for their work. A topic that is a real reflection of the content of their paper. A topic that sums up the whole work and one that is more inclined to the majors as opposed to the minors.
Minor Comments and Suggestions
The paper’s abstract is non-satisfactory. It is too brief and it failures to satisfy the requirements of a typical abstract. Further, details of the authors including their names and addresses have been presented in the abstract section which should not be the case. A typical abstract should provide, in brief, the research focus, the data sources, data reconstruction methods, results and findings and the main conclusions and recommendations of the paper.
On page 2 at the end of the first paragraph, the document provides: "This essay' presents data' on business failures at the lowest level of aggregation, topically and chronologically, from the origins of the series around 1895 until the end of depression in 1939” (Richardson and Michael, 2). Considering that this is a research paper, there should be no use of general terms such as ‘around’ as it is the case in the quoted statement.
On page 4 at the beginning of the second paragraph, the paper has this sentence: “The new law' allowed a corporation' to file a petition declaring that it was unable to meet its debts and desired to reorganize” (Richardson and Michael, 4). The use of the article ‘an’ is grammatically wrong because it is not a single corporation that was permitted by the new law to file petitions declaring that it was unable to meet its debts but all corporations.
The first sentence of the last paragraph on page 23 has a mistake as well. The sentence is as follows: ‘In April 1897 and November 1921, the cotton manufactures experience a large number of liabilities of failed businesses about the average (resulting in outliers of 42 and 43, respectively)' (Richardson and Michael, 23). There are two errors in this sentence. One of them is the use of the term ‘manufactures’ instead of ‘manufacturers’ and the failure to use the past tense for the experience.
Richardson, Gary, and Michael Gou. Business Failures by Industry in the United States, 1895 to 1939: A STATISTICAL HISTORY. 1st ed. Cambridge, MA 02138: University of California, 2011. Print.