Financial distress in Chinese industry: Microeconomic, macroeconomic and institutional influences

    Research output: Working paper

    Abstract

    We study the impact of both microeconomic factors and the macroeconomy on the financial distress of Chinese listed companies over a period of massive economic transition, 1995 to 2006. Based on an economic model of financial distress under the institutional setting of state protection against exit, and using our own firm-level measure of distress, we find important impacts of firm characteristics, macroeconomic instability and institutional factors on the hazard rate of financial distress. The results are robust to unobserved heterogeneity at the firm level, as well as those shared by firms in similar macroeconomic founding conditions. Comparison with related studies for other economies highlights important policy implications.
    Original languageEnglish
    Place of PublicationSt. Andrews
    PublisherCentre for Research into Industry, Enterprise, Finance and the Firm
    Publication statusPublished - 2010

    Publication series

    NameCRIEFF Discussion Papers

    Keywords

    • financial distress
    • macroeconomic instability
    • Cox proportional hazards model
    • unobserved heterogeneity
    • emerging economies

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