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Financial and Economic Determinants of Firm Default

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  • Giulio Bottazzi

    ()
    (LEM - Laboratory of Economics and Management - Sant'Anna School of Advanced Studies)

  • Marco Grazzi

    (LEM - Laboratory of Economics and Management - Sant'Anna School of Advanced Studies)

  • Angelo Secchi

    ()
    (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris 1 - Panthéon-Sorbonne, Paris School of Economics - Université Paris 1 - Panthéon-Sorbonne)

  • Federico Tamagni

    (LEM - Laboratory of Economics and Management - Sant'Anna School of Advanced Studies)

Abstract

This paper investigates the relevance of financial and economic variables as determinants of firm default. Our analysis cover a large sample of medium-sized limited liability firms. Since default might lead, through bankruptcy or radical restructuring, to firm's exit, our work also relates with previous contributions on industrial demography. Using non parametric tests we assess to what extent defaulting firms differ from the non-defaulting group. Bootstrap probit regressions confirm that economic variables, in addition to standard financial indicators, play both a long and short term effect. Our findings are robust with respect to the inclusion of Distance to Default and risk ratings among the regressors.

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Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number hal-00642699.

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Date of creation: 2011
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Publication status: Published, Journal of Evolutionary Economics, 2011, 373
Handle: RePEc:hal:cesptp:hal-00642699

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Cited by:
  1. Molinari, Massimo, 2013. "Joint analysis of the non-linear debt–growth nexus and cash-flow sensitivity: New evidence from Italy," Structural Change and Economic Dynamics, Elsevier, vol. 24(C), pages 34-44.
  2. Navaretti , Giorgio Barba & Castellani , Davide & Pieri , Fabio, 2013. "Age and firm growth. Evidence from three European countries," CIRCLE Electronic Working Papers 2013/41, Lund University, CIRCLE - Center for Innovation, Research and Competences in the Learning Economy.
  3. G. Bottazzi & M. Grazzi, 2013. "Dynamics of productivity and cost of labor in Italian Manufacturing firms," Working Papers wp865, Dipartimento Scienze Economiche, Universita' di Bologna.
  4. Ferragina, Anna & Pittiglio, Rosanna & Reganati, Filippo, 2012. "Multinational status and firm exit in the Italian manufacturing and service sectors," Structural Change and Economic Dynamics, Elsevier, vol. 23(4), pages 363-372.
  5. FERRAGINA, Anna Maria, 2013. "The Impact of FDI on Firm Survival and Employment: A Comparative Analysis for Turkey and Italy," CELPE Discussion Papers 127, CELPE - Centre of Labour Economics and Economic Policy, University of Salerno, Italy.
  6. Angelo Secchi & Federico Tamagni & Chiara Tomasi, 2012. "Exporting under Financial Constraints: Margins, Switching Dynamics and Prices," Development Working Papers 338, Centro Studi Luca d\'Agliano, University of Milano, revised 16 Jul 2012.
  7. Filipe Silva & Carlos Carreira, 2009. "No Deep Pockets: Some stylized results on firms' financial constraints," GEMF Working Papers 2009-06, GEMF - Faculdade de Economia, Universidade de Coimbra.
  8. Giulio Bottazzi & Federico Tamagni, 2011. "Big and fragile: when size does not shield from default," Applied Economics Letters, Taylor & Francis Journals, vol. 18(14), pages 1401-1404.
  9. Adalgiso Amendola & Anna Maria Ferragina & Rosanna Pittiglio & Filippo Reganati, 2012. "Are exporters and multinational firms more resilient over a crisis? First evidence for manufacturing enterprises in Italy," Economics Bulletin, AccessEcon, vol. 32(3), pages 1914-1926.
  10. Giovanni Dosi & Marco Grazzi & Chiara Tomasi & Alessandro Zeli, 2010. "Turbulence underneath the big calm? Exploring the micro-evidence behind the flat trend of manufacturing productivity in Italy," LEM Papers Series 2010/03, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.

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