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Financial and Economic Determinants of Firm Default

  • 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 I - Panthéon-Sorbonne, Paris School of Economics - Université Paris I - Panthéon-Sorbonne)

  • Federico Tamagni

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

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
Note: View the original document on HAL open archive server: http://hal.archives-ouvertes.fr/hal-00642699
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  1. Cosci, Stefania & Meliciani, Valentina, 2002. "Multiple Banking Relationships: Evidence from the Italian Experience," Manchester School, University of Manchester, vol. 70(0), pages 37-54, Supplemen.
  2. Giulio Bottazzi & Angelo Secchi & Federico Tamagni, 2008. "Productivity, profitability and financial performance," Industrial and Corporate Change, Oxford University Press, vol. 17(4), pages 711-751, August.
  3. Richard Disney & Jonathan Haskel & Ylva Heden, 2003. "Entry, Exit and Establishment Survival in UK Manufacturing," Journal of Industrial Economics, Wiley Blackwell, vol. 51(1), pages 91-112, 03.
  4. Audretsch, David B. & Santarelli, Enrico & Vivarelli, Marco, 1999. "Start-up size and industrial dynamics: some evidence from Italian manufacturing," International Journal of Industrial Organization, Elsevier, vol. 17(7), pages 965-983, October.
  5. Mata, Jose & Portugal, Pedro, 1994. "Life Duration of New Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 42(3), pages 227-45, September.
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