Firms’economic crisis and firm exit: do intangibles matters?
Alessandro Arrighetti (),
F. Landini () and
Andrea Lasagni ()
No 2015-EP04, Economics Department Working Papers from Department of Economics, Parma University (Italy)
The crisis regarding the Euro area has caused several business closures, especially in the periphery of the EMU. In this paper, we use an original Italian firm-level dataset to determine why firms exit the market during times of economic crisis, paying particular attention to the role of intangibles. We argue that intangibles strengthen a firm’s resilience, which improves the firm’s ability to cope with adverse events and unexpected shocks. We obtain two main results: first, we show that the presence of intangibles significantly reduces the probability of firm exit, especially during the initial phase of the crisis; second, we find that financial constraints become more relevant than intangibles in explaining firm exit during the later stages of the crisis. Thus, the process of firm selection during the crisis has undergone a rapid transformation, with distortions that may lead even skilled firms to exit. Implications of these findings for EU recovery policies are discussed.
Keywords: intangibles; firm exit; EU crisis; industry dynamics (search for similar items in EconPapers)
JEL-codes: D22 L21 L25 O32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-ent, nep-ind and nep-sbm
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