FIRM SURVIVAL, UNCERTAINTY, AND FINANCIAL FRICTIONS: IS THERE A FINANCIAL UNCERTAINTY ACCELERATOR?

Joseph Byrne, Marina-Eliza Spaliara and Serafeim Tsoukas

Economic Inquiry, 2016, vol. 54, issue 1, 375-390

Abstract: type="main" xml:id="ecin12240-abs-0001"> Using a large panel of unquoted UK firms over the period 2000–2009, we examine the impact of firm-specific uncertainty on corporate failures. In this context we also distinguish between firms which are likely to be more or less dependent on bank finance as well as public and nonpublic companies. Our results document a significant effect of uncertainty on firm survival. This link is found to be more potent during the recent financial crisis compared with tranquil periods. We also uncover significant firm-level heterogeneity because the survival chances of bank-dependent and nonpublic firms are most affected by changes in uncertainty, especially during the recent global financial crisis. (JEL E44, F32, F34, G32)

Date: 2016
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Related works:
Working Paper: Firm survival, uncertainty and financial frictions: Is there a financial uncertainty accelerator? (2015)
Working Paper: Firm survival, uncertainty and financial frictions: Is there a financial uncertainty accelerator? (2015)
Working Paper: Firm survival, uncertainty and Financial frictions: Is there a Financial uncertainty accelerator? (2015)
Working Paper: Firm survival, uncertainty and financial frictions: Is there a financial uncertainty accelerator? (2014)
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