To invest or not to invest, that is the question: analysis of firm behavior under anticipated shocks
The result's identifiers
Result code in IS VaVaI
<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F00216208%3A11640%2F16%3A00461733" target="_blank" >RIV/00216208:11640/16:00461733 - isvavai.cz</a>
Result on the web
<a href="http://dx.doi.org/10.1371/journal.pone.0158782" target="_blank" >http://dx.doi.org/10.1371/journal.pone.0158782</a>
DOI - Digital Object Identifier
<a href="http://dx.doi.org/10.1371/journal.pone.0158782" target="_blank" >10.1371/journal.pone.0158782</a>
Alternative languages
Result language
angličtina
Original language name
To invest or not to invest, that is the question: analysis of firm behavior under anticipated shocks
Original language description
When companies are faced with an upcoming and expected economic shock some of them tend to react better than others. They adapt by initiating investments thus successfully weathering the storm, while others, even though they possess the same information set, fail to adopt the same business strategy and eventually succumb to the crisis. We use a unique setting of the recent financial crisis in Croatia as an exogenous shock that hit the country with a time lag, allowing the domestic firms to adapt. We perform a survival analysis on the entire population of 144,000 firms in Croatia during the period from 2003 to 2015, and test whether investment prior to the anticipated shock makes firms more likely to survive the recession. We find that small and micro firms, which decided to invest, had between 60 and 70% higher survival rates than similar firms that chose not to invest. This claim is supported by both non-parametric and parametric tests in the survival analysis. From a normative perspective this finding could be important in mitigating the negative effects on aggregate demand during strong recessionary periods.
Czech name
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Czech description
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Classification
Type
J<sub>x</sub> - Unclassified - Peer-reviewed scientific article (Jimp, Jsc and Jost)
CEP classification
AH - Economics
OECD FORD branch
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Result continuities
Project
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Continuities
I - Institucionalni podpora na dlouhodoby koncepcni rozvoj vyzkumne organizace
Others
Publication year
2016
Confidentiality
S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů
Data specific for result type
Name of the periodical
PLoS ONE
ISSN
1932-6203
e-ISSN
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Volume of the periodical
11
Issue of the periodical within the volume
8
Country of publishing house
US - UNITED STATES
Number of pages
18
Pages from-to
1-18
UT code for WoS article
000381380400005
EID of the result in the Scopus database
2-s2.0-84983394490