Spring Forward or Fall Back? The Post-Crisis Recovery of Firms
This paper studies corporate performance in the aftermath of the global crisis by examining 6,581 manufacturing firms in 48 developed and developing countries in 2010, identifying factors of resilience as well as vulnerability. Based on a cross-sectional analysis, the results show that pre-crisis leverage and short-term debt have had negative effects on the speed of the recovery, while asset tangibility has had positive effects. The negative effect of leverage is non-linear, being particularly strong in firms with high pre-crisis leverage. Furthermore, the effects are different for advanced and emerging market economies. The paper also shows that the macroeconomic framework critically matters for firm growth. In particular, in countries that have allowed the exchange rate to depreciate, firms have had a faster recovery in sectors highly dependent on trade.
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2-digit SIC 2010 with respect advanced economies Baseline Regression Bernanke Braun Business Cycle Capital Structure change In real Claessens collateral Coricelli corporate performance corrected by clustering Credit Crunch Density Distribution Dependent variable Descriptive Statistics Distribution of Corporate Driffield Economic Activity Effects of Leverage emerging economies errors in parentheses explanatory variables Financial Accelerator firm growth firm performance firm-level firms in advanced firms in emerging following regression full sample Gertler global crisis Gr0wth09 that represent growth in real High leverage IMF Working Paper International Monetary Fund Journal of Finance Laeven level at 2-digit Levels of Leverage leverage firms liability Low leverage macroeconomic Manova manufacturing firms manufacturing sector median leverage Natural logarithm negative effect pre-crisis leverage R-squared real depreciation real sales growth represent the annual respect to 2008 Robust standard errors Robustness Tests Sachs sample firms short-term debt Significance p-value table presents tangibility total assets trade sensitivity U.S. dollars variables are dated