How do firms overcome financial constraint anxiety to survive in the market? Evidence from large manufacturing data

Dongyang Zhang

International Review of Financial Analysis, 2020, vol. 70, issue C

Abstract: In so far as financial constraints affect firm performance, they may expose firms to survival risks. Using a large panel of Chinese firms observed from 1998 to 2013, I analyse the causal relationship between firm survival and financial constraints and how firm performance impacts this relationship. I find that financial constraints play an important role in influencing firm survival. Moreover, financial constraints are the mechanism underlying the relationship between firm performance and survival, and productive and profitable firms can alleviate financial constraints. Privately owned and foreign-owned firms with more leverage face more difficulties surviving in the market; however, state-owned enterprises with more leverage can ease their financial limitations. Finally, I provide evidence that high dependency and high coverage ratios can facilitate firms' survival through alleviating financial constraints.

Keywords: Firm survival; Financial constraints; Firm performance; Large panel of Chinese firms (search for similar items in EconPapers)
JEL-codes: D24 G14 G32 L22 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1057521920301472
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:70:y:2020:i:c:s1057521920301472

DOI: 10.1016/j.irfa.2020.101503

Access Statistics for this article

International Review of Financial Analysis is currently edited by B.M. Lucey

More articles in International Review of Financial Analysis from Elsevier
Bibliographic data for series maintained by Catherine Liu ().