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The Shadow of Death: Analysing the Pre-Exit Productivity of Portuguese Manufacturing Firms

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  • Carlos Carreira

    ()
    (Faculty of Economics and GEMF, University of Coimbra)

  • Paulino Teixeira

    ()
    (Faculty of Economics and GEMF, University of Coimbra)

Abstract

In this study, we examine the pre-exiting productivity profile of mature firms relatively to survivors. We also evaluate how productivity affects the probability of exit along various dimensions. Our approach is an empirical one, and it is based on an unbalanced panel of Portuguese manufacturing firms covering a period of one decade. Our findings confirm that market selection forces low-productivity firms to exit, but there is also evidence that a sizeable portion of low-productivity firms do not shut down. Conversely, there is a non-negligible fraction of high-productivity firms that do actually close. In line, too, with some key theoretical predictions, exiting firms reveal a falling productivity level over a number of years prior to exit. Finally, our results from the survival model show that both low-productivity and small firms are much more likely to exit the market. Industry and macro environment were also found to have a non-negligible role on the exit of mature firms.

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Bibliographic Info

Paper provided by GEMF - Faculdade de Economia, Universidade de Coimbra in its series GEMF Working Papers with number 2008-05.

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Length: 38 pages
Date of creation: Jul 2009
Date of revision:
Publication status: Published in Small Business Economics 36(3): 337-351, 2011
Handle: RePEc:gmf:wpaper:2008-05

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Keywords: Pre-exit performance; Exit pattern; Productivity; Firm survival; Portugal;

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Citations

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Cited by:
  1. Fackler, Daniel & Schnabel, Claus & Wagner, Joachim, 2012. "Lingering illness or sudden death? Pre-exit employment developments in German establishments," Discussion Papers 82, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  2. Elsa de Morais Sarmento & Alcina Nunes, 2012. "The Dynamics of Employer Entreprise Creation in Portugal Over the Last Two Decades: A Firm Size, Regional and Sectoral Perspective," Notas Económicas, Faculdade de Economia, Universidade de Coimbra, issue 36, pages 6-22, December.
  3. Calá, Carla Daniela & Manjón Antolín, Miguel C. & Arauzo Carod, Josep Maria, 2014. "The Determinants of Exit in Argentina: Core and Peripheral Regions," Working Papers 2072/225299, Universitat Rovira i Virgili, Department of Economics.
  4. Michael Pflüger & Stephan Russek, 2013. "Business Conditions and Exit Risks Across Countries," Open Economies Review, Springer, vol. 24(5), pages 963-976, November.
  5. Koski, Heli & Pajarinen, Mika, 2013. "Subsidies, Shadow of Death and Productivity," ETLA Working Papers 16, The Research Institute of the Finnish Economy.
  6. Carlos Carreira & Filipe Silva, 2013. "Do Size, Age and Dividend Policy Provide Useful Measures of Financing Constraints? New Evidence from a Panel of Portuguese Firms," GEMF Working Papers 2013-26, GEMF - Faculdade de Economia, Universidade de Coimbra.

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