Abstract. This study is an attempt to provide new empirical evidence on factors associated with the closure of new firms in Spain. We examined the influence on of firm size, business growth, productivity and financial structure on firm closure. Additionally, we explored the existence of the so called «shadow of death». The study was conducted on a sample of 1839 Spanish firms which existed and closed during the 1995-2002 period. Results suggest that start ups with a higher proportion of own equity tend to survive longer. Even if these firms live beyond the infancy period (i.e., third year from inception), grow further (i.e., assets and employment growth), and achieve a higher productivity level, they do so in an unsustainable way. It seems that they have a better access to external funds to finance business expansion. However, these firms can not cope with the financial pressure, or at least, they do not grow as to face all the financial costs, and therefore, entrepreneurs end up abandoning their business activity. We consider that these results highlight the importance of good management and prudential financing of new firms. When entrepreneurs are not able to deal with the «liability of age and newness», and most importantly, they can not properly manage the «liability of growth», either they sell off the business or quit the venture. We did not find substantial evidence of the existence of the «shadow of death» (i.e., gradual decline in the performance of the firm in the previous years to closure). Our findings suggest that firms exit the market because of a non-efficient management of business growth.