Firm survival, uncertainty and financial frictions: Is there a financial uncertainty accelerator?

Joseph Paul Byrne, Marina-Eliza Spaliara, Serafeim Tsoukas

    Research output: Contribution to journalArticlepeer-review

    31 Citations (Scopus)

    Abstract

    Using a large panel of unquoted UK firms over the period 2000-09, we examine the impact of firm-specific uncertainty on corporate failures. In this context we also distinguish between firms which are likely to be more or less dependent on bank finance as well as public and non-public companies. Our results document a significant effect of uncertainty on firm survival. This link is found to be more potent during the recent financial crisis compared with tranquil periods. We also uncover significant firm-level heterogeneity since the survival chances of bank-dependent and non-public firms are most affected by changes in uncertainty, especially during the recent global financial crisis.
    Original languageEnglish
    Pages (from-to)375-390
    Number of pages16
    JournalEconomic Inquiry
    Volume54
    Issue number1
    Early online date14 Jul 2015
    DOIs
    Publication statusPublished - Jan 2016

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