What matters for corporate failures in Asia? Exploring the role of firm-specific characteristics during the Asian crisis

Abstract

Empirical investigation of business failures has considered the effects of macroeconomic conditions and financial healthiness in isolation. Using a panel of five Asian economies -Indonesia, Korea, Malaysia, Singapore and Thailand -over the period [1995][1996][1997][1998][1999][2000][2001][2002][2003][2004][2005][2006][2007] we analyse the link between firm survival and financial healthiness during the 1997-98 Asian crisis. We show that the sensitivity of survival to financial indicators is significantly higher during the crisis compared to tranquil periods. In addition, we find that the effect of financial indicators is quantitatively and qualitatively more important in economies with less developed stock exchanges.JEL classification: D21, G32, F20

Firm’s survival, rating and efficiency: new empirical evidence

“…In general, the so-called "financial health" has been considered a crucial determinant of firms' survival. Spaliara and Tsoukas (2013) show that the balance sheet position (a combination of debt, assets and profits) matters for surviving, while other authors highlight the important role of debt structure. On the one hand, Audretsch et al (2000) and Fotopoulos and Louri (2000) show, for the Greek case, the negative effect of a growing debt-to-asset ratio on firms' survival, while Bunn and Redwood (2003) confirm their findings also for the UK case.…”

What drives business failure? Exploring the role of internal and external knowledge capabilities during the global financial crisis

“…Failure by insolvency, liquidation or closure refers to the voluntary winding-down of a business due to poor performance, which is viewed as an efficient reallocation of resources (Siepel et al 2017). The decision to close down a business is jointly influenced by a variety of factors, including firm characteristics (Colombelli et al 2013;Spaliara and Tsoukas 2013), firm-specific capabilities (Cefis and Marsili 2012), and macroeconomic conditions (Liu 2004). Bhattacharjee et al (2009) state be cyclical in nature.…”

“…To test these hypotheses, we estimate a parametric hazard model assuming a Weibull distribution. Further, following the methodology proposed by Spaliara and Tsoukas (2013), we interact predictor variables with a variable that captures the financial crisis period (2009)(2010)(2011)(2012)(2013). Our objective is to capture the sensitivity of business failure to internal and external knowledge capabilities recession.…”

Examining the impact of firm-specific and environmental-specific factors on short and long-term firm survival during an economic crisis

“…According to the first and earlier stream of research (Spaliara and Tsoukas, 2013), firm-specific characteristics are considered to be the most important determinants of firm survival (Geroski et al , 2010). For example, Colombelli et al (2013) analyzed the effects of a firm's knowledge base on its potential to survive.…”