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

Listed author(s):
  • Joseph P. Byrne
  • Marina-Eliza Spaliara
  • Serafeim Tsoukas

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.

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Paper provided by Business School - Economics, University of Glasgow in its series Working Papers with number 2015_04.

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Date of creation: Feb 2015
Handle: RePEc:gla:glaewp:2015_04
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