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Financial and economic determinants of firm default

  • Giulio Bottazzi

    ()

  • Marco Grazzi
  • Angelo Secchi
  • Federico Tamagni

This paper investigates the relevance of financial and economic variables as determinants of firm defaults. Our analysis is not limited to publicly traded companies but extends to a large sample of limited liability firms. We consider size, growth, profitability and productivity together with a standard set of financial indicators. Non parametric tests allow to asses to what extent defaulting firms differ from the non-defaulting group. Bootstrap probit regressions confirm that economic variables play both a long and short term effect. Our findings are robust with respect to the inclusion of Distance to Deafult and risk ratings among the regressors.

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File URL: http://hdl.handle.net/10.1007/s00191-011-0224-6
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Article provided by Springer in its journal Journal of Evolutionary Economics.

Volume (Year): 21 (2011)
Issue (Month): 3 (August)
Pages: 373-406

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Handle: RePEc:spr:joevec:v:21:y:2011:i:3:p:373-406
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