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The impact of state aid on the survival and financial viability of aided firms

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  • Heim, Sven
  • Hüschelrath, Kai
  • Schmidt-Dengler, Philipp
  • Strazzeri, Maurizio

Abstract

We estimate the causal impact of restructuring aid granted by the European Commission between 2003 and 2012 on the survival and financial viability of aided firms. Using a comprehensive dataset we find that restructuring aid increases a firm's average survival time by 8 to 15 years and decreases the hazard rate by 58 to 68 percent, depending on the definition of firm survival. Further analysis finds strong support that, in the longer run, aid receiving firms have a significantly higher probability to improve their financial viability than the counterfactual group.

Suggested Citation

  • Heim, Sven & Hüschelrath, Kai & Schmidt-Dengler, Philipp & Strazzeri, Maurizio, 2016. "The impact of state aid on the survival and financial viability of aided firms," ZEW Discussion Papers 16-035, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:16035
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    8. Radeef Chundakkadan & Rajesh Raj Natarajan & Subash Sasidharan, 2022. "Small firms amidst COVID‐19: Financial constraints and role of government support," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 51(3), November.
    9. Peixin Li & Lixia Li & Yichun Xie & Xueliang Zhang, 2021. "Investigating the effects of market segmentation on firm survival and their heterogeneities in China," Growth and Change, Wiley Blackwell, vol. 52(4), pages 2614-2634, December.
    10. Peter Grajzl & Jaka Cepec & Barbara Mörec, 2023. "Weaned off public money: The effect of discontinued reception of public cash on firm outcomes," Kyklos, Wiley Blackwell, vol. 76(1), pages 41-76, February.

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    More about this item

    Keywords

    government policy; state aid; ex-post evaluation; survival; European Union;
    All these keywords.

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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