Economic Crisis and Firm Exit: Do Intangibles Matter?
Fabio Landini (),
Alessandro Arrighetti () and
Andrea Lasagni ()
No 2015/10, SEP Working Papers from LUISS School of European Political Economy
The crisis in the Euro area has caused several business closures, especially in the EMU periphery. In this paper we use an original firm-level dataset on Italy to study the determinants of firm exit during the crisis, having a particular focus on the role of intangibles. We argue that intangibles strengthen the firm’s resilience capacity, and this in turn improves the firms’ ability to cope with adverse and unexpected shocks. We obtain two main results: first we show that intangibles significantly reduce 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 at 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. Some of the implications of these findings for the 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 and nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:ris:sepewp:2015_010
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