12 research outputs found
To Invest or Not to Invest, That Is the Question: Analysis of Firm Behavior under Anticipated Shocks.
When companies are faced with an upcoming and expected economic shock some of them tend to react better than others. They adapt by initiating investments thus successfully weathering the storm, while others, even though they possess the same information set, fail to adopt the same business strategy and eventually succumb to the crisis. We use a unique setting of the recent financial crisis in Croatia as an exogenous shock that hit the country with a time lag, allowing the domestic firms to adapt. We perform a survival analysis on the entire population of 144,000 firms in Croatia during the period from 2003 to 2015, and test whether investment prior to the anticipated shock makes firms more likely to survive the recession. We find that small and micro firms, which decided to invest, had between 60 and 70% higher survival rates than similar firms that chose not to invest. This claim is supported by both non-parametric and parametric tests in the survival analysis. From a normative perspective this finding could be important in mitigating the negative effects on aggregate demand during strong recessionary periods
Testing of post-matching characteristics between investing and non-investing firms.
<p>Testing of post-matching characteristics between investing and non-investing firms.</p
Kaplan-Meier survival estimate by firm size.
<p>Kaplan-Meier survival estimate by firm size.</p
Kaplan-Meier survival estimate for investing and non-investing firms (small firms).
<p>Kaplan-Meier survival estimate for investing and non-investing firms (small firms).</p
Distribution of firms by type of ownership.
<p>Distribution of firms by type of ownership.</p
Kaplan-Meier survival estimate for investing and non-investing firms (micro firms).
<p>Kaplan-Meier survival estimate for investing and non-investing firms (micro firms).</p
Kaplan-Meier survival estimate by type of ownership.
<p>Kaplan-Meier survival estimate by type of ownership.</p
Kaplan-Meier survival estimate for investing and non-investing firms (medium and large firms).
<p>Kaplan-Meier survival estimate for investing and non-investing firms (medium and large firms).</p
Distribution of firms by type of ownership.
<p>Distribution of firms by type of ownership.</p
Cox proportional hazard model—survival rates based on firm size after matching.
<p>Cox proportional hazard model—survival rates based on firm size after matching.</p