Financial Distress in Chinese Industry: Microeconomic, Macroeconomic and Institutional Influences

Arnab Bhattacharjee and Jie Han

No 1001, CRIEFF Discussion Papers from Centre for Research into Industry, Enterprise, Finance and the Firm

Abstract: TWe study the impact of both microeconomic factors and the macroeconomy on the financial distress of Chinese listed companies over a period of massive economic transition, 1995 to 2006. Based on an economic model of financial distress under the institutional setting of state protection against exit, and using our own firm-level measure of distress, we find important impacts of firm characteristics, macroeconomic instability and institutional factors on the hazard rate of financial distress. The results are robust to unobserved heterogeneity at the firm level, as well as those shared by firms in similar macroeconomic founding conditions. Comparison with related studies for other economies highlights important policy implications.

Keywords: Financial Distress; Macroeconomic Instability; Cox Proportional Hazards Model; Unobserved Heterogeneity; Emerging Economies. (search for similar items in EconPapers)
JEL-codes: C41 D21 E32 L16 (search for similar items in EconPapers)
Date: 2010-03
New Economics Papers: this item is included in nep-mac and nep-tra
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Working Paper: Financial Distress in Chinese Industry: Microeconomic, Macroeconomic and Institutional Infuences (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:san:crieff:1001

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