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

Joseph Paul Byrne, Marina-Eliza Spaliara, Serafeim Tsoukas

Research output: Contribution to journalArticle

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
DOIs
Publication statusPublished - Jan 2016

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