Financial conservatism fosters job creation during economic crises

The role of government policies for Italian firms during the COVID-19 crisis

“…Model II adds the multiplicative dummies of COVID and medium and large company dummies, leaving the multiplicative variable for small firms as the dummy base. Model III adds the variable Financial Slack at the beginning of the period, which could be important because it allows companies to have a stockpile of financial resources that may play a role during an economic crisis, impacting positively on their growth ( Sánchez-Vidal et al, 2020 ). The lower number of observations from Model III is due to the unavailability of the variable Financial Debt for most of the companies, as shown in the descriptive statistics.…”

“… Jovanovic's (1982) noteworthy contribution and that of other papers suggest that the growth of a company is related to age and size (e.g., Heshmati, 2001 ; Mateev and Anastasov, 2010 ). There are a number of important papers that have used the Jovanovic model 1 (e.g., Dunne and Evans, 1987 ; Hughes, 1994 ; Heshmati, 2001 ; Honjo and Harada, 2006 ; Morone and Testa, 2008 ; Mateev and Anastasov, 2010 ; Haltiwanger et al, 2013 ; Coad et al, 2013 ; Lawless, 2014 ; Navaretti et al 2014 ; Anton, 2019 ; Sanchez-Vidal et al, 2020 ; Yang and Tsou, 2020 ; Navaretti et al 2022 ). Moreover, firm growth is related to profitability ( Santos and Brito, 2012 ).…”

Women CEOs and firm performance in the construction industry: evidence from Spain

“…In addition, Bessler et al (2013) conclude that the choice of financial conservatism is linked to a company's attempt to maintain financial flexibility, which allows it to respond to unexpected changes in cash flow and investment opportunities quickly and optimally. That is, the fact that companies are conservative allows them to create more jobs and have a less negative variation in employment in the medium term (Sanchez-Vidal et al , 2020).…”