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The effect of crises on firm exit and the moderating effect of firm size

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  • Amorim Varum, Celeste
  • Rocha, Vera Catarina

Abstract

The liability of smallness assumption suggests that smaller firms face higher exit risks. However, does it apply during crises? We show that during downturns size reduces firms’ exit risk by less; the hazard rate increases more rapidly in size.

Suggested Citation

  • Amorim Varum, Celeste & Rocha, Vera Catarina, 2012. "The effect of crises on firm exit and the moderating effect of firm size," Economics Letters, Elsevier, vol. 114(1), pages 94-97.
    • Handle: RePEc:eee:ecolet:v:114:y:2012:i:1:p:94-97
    DOI: 10.1016/j.econlet.2011.09.015
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    7. M. Grazzi & C. Piccardo & C. Vergari, 2017. "Building a firm level dataset for the analysis of industrial dynamics and demography," Working Papers wp2003, Dipartimento Scienze Economiche, Universita' di Bologna.
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    9. Oksana Seroka‐Stolka & Kamil Fijorek, 2020. "Enhancing corporate sustainable development: Proactive environmental strategy, stakeholder pressure and the moderating effect of firm size," Business Strategy and the Environment, Wiley Blackwell, vol. 29(6), pages 2338-2354, September.
    10. Armand, Alex & Mendi, Pedro, 2018. "Demand drops and innovation investments: Evidence from the Great Recession in Spain," Research Policy, Elsevier, vol. 47(7), pages 1321-1333.
    11. Varum, Celeste & Rocha, Vera Catarina & Valente da Silva, Hélder, 2014. "Economic slowdowns, hazard rates and foreign ownership," International Business Review, Elsevier, vol. 23(4), pages 761-773.
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    15. Iman Cheratian & Saleh Goltabar & Mohammad Reza Farzanegan, 2022. "Survival Strategies under Sanctions: Firm-Level Evidence from Iran," CESifo Working Paper Series 9568, CESifo.
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    17. Kemal Türkcan & Hilal Erkuş-Öztürk, 2020. "The impact of economic and political crises on the survival of tourism-related firms: Evidence from Antalya," Tourism Economics, , vol. 26(7), pages 1152-1174, November.
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    20. Jarle Aarstad & Stig-Erik Jakobsen & Arnt Fløysand & Olav Andreas Kvitastein, 2024. "Governmental Revenue Compensation during COVID-19: Did Firm Resources and Institutional Factors Explain Who Received It?," Tourism and Hospitality, MDPI, vol. 5(3), pages 1-14, August.
    21. Luis Alfredo Arguelles Ma & Roman Alberto Quijano Garcia & Mario Javier Fajardo & Fernando Medina Blum & Carlos Enrique Cruz Mora, 2018. "Indebtedness As An Indicator Of Financial Profitability In The Tourist Mipymes Of Campeche El Endeudamiento Como Indicador De Rentabilidad Financiera En Las Mipymes Turisticas De Campeche," Revista Internacional Administracion & Finanzas, The Institute for Business and Finance Research, vol. 11(1), pages 39-51.
    22. Jarle Aarstad & Stig-Erik Jakobsen, 2020. "Norwegian Firms’ Green and New Industry Strategies: A Dual Challenge," Sustainability, MDPI, vol. 12(1), pages 1-14, January.
    23. Annamaria Bianchi & Silvia Biffignandi, 2017. "The effect of size on business net change during crises: a multifactor partitioning analysis of Italian regions during 2007–2010," Letters in Spatial and Resource Sciences, Springer, vol. 10(2), pages 237-251, July.

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    More about this item

    Keywords

    Survival; Hazard; Firm size; Crisis; Manufacturing; Portugal;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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