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Firm survival in new EU member states

Author

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  • Eduard Baumohl

    () (Narodna banka Slovenska, Bratislava)

  • Ichiro Iwasaki

    () (Institute of Economic Research, Hitotsubashi University, Tokyo, Japan)

  • Evzen Kocenda

    () (Institute of Economic Studies, Charles University, Prague, Czech Republic)

Abstract

We analyze firm survival determinants in four new European Union member states (the Czech Republic, Hungary, Poland, and Slovakia). We employ the Cox proportional hazards model on firm-level data for the period of 2006 to 2015. We show that in all four countries, less concentrated control of large shareholders, higher solvency, and more board directors are linked with the increased probability of firm survival. However, an excessive number of board directors has a detrimental effect. Firms with foreign owners and higher returns on their assets exhibit better survival chances. Conversely, across countries and industries, larger firms and those hiring international auditors have lower probabilities of survival. A number of specific determinants influence firm survival in different ways, emphasizing the importance of country and industry differences when studying firm survival. We also document that in an economic sense, determinants associated with the legal form, ownership structure and corporate governance show the most beneficial effects with respect to firm survival.

Suggested Citation

  • Eduard Baumohl & Ichiro Iwasaki & Evzen Kocenda, 2019. "Firm survival in new EU member states," Working and Discussion Papers WP 4/2019, Research Department, National Bank of Slovakia.
  • Handle: RePEc:svk:wpaper:1062
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    Cited by:

    1. Ichiro Iwasaki & Evzen Kocenda & Yoshisada Shida, 2020. "Institutions, Financial Development, and Small Business Survival: Evidence from European Emerging Markets," Working Papers IES 2020/39, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Oct 2020.
    2. Basu, Sayantani & Campbell, Roy H., 2020. "Going by the numbers : Learning and modeling COVID-19 disease dynamics," Chaos, Solitons & Fractals, Elsevier, vol. 138(C).
    3. Baumöhl, Eduard & Iwasaki, Ichiro & Kočenda, Evžen, 2019. "Institutions and determinants of firm survival in European emerging markets," Journal of Corporate Finance, Elsevier, vol. 58(C), pages 431-453.
    4. Kočenda, Evžen & Iwasaki, Ichiro, 2020. "Bank survival in Central and Eastern Europe," International Review of Economics & Finance, Elsevier, vol. 69(C), pages 860-878.
    5. Ichiro Iwasaki & Byung-Yeon Kim, 2020. "Legal forms, organizational architecture, and firm failure: a large survival analysis of Russian corporations," European Journal of Law and Economics, Springer, vol. 49(2), pages 227-275, April.
    6. Ichiro Iwasaki & Evzen Kocenda & Yoshisada Shida, 2020. "Distressed Acquisitions Evidence from European Emerging Markets," KIER Working Papers 1031, Kyoto University, Institute of Economic Research.
    7. Ichiro Iwasaki & Byung-Yeon Kim, 2020. "Legal forms, organizational architecture, and firm failure: a large survival analysis of Russian corporations," European Journal of Law and Economics, Springer, vol. 49(2), pages 227-275, April.

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    More about this item

    Keywords

    firm survival; new EU member states; survival and exit determinants; hazards model;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G01 - Financial Economics - - General - - - Financial Crises
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • P34 - Economic Systems - - Socialist Institutions and Their Transitions - - - Finance

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