Financial Crises, Firm-Level Shocks, and Large Downturns: Evidence From Greece

Giannoulakis, Stylianos; Sakellaris, Plutarchos

doi:10.2139/ssrn.3630244

Cited by 4 publications

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“…As a result, the Herfindahl index of firm sales shares rose from 0.065 in the pre‐crisis period to 0.081 during the crisis leading to a higher direct effect of firm‐specific shocks 11 . The clear negative relationship between exit hazard and firm size accords with the results of Giannoulakis and Sakellaris (2020). These authors found that the survival probability of Greek firms during the period 2001–2014 is negatively correlated with firm size.…”

Section: Estimation Resultssupporting

confidence: 89%

“…The above expression implies that the larger is the Herfindahl index, the greater will be the direct effect of firm-specific shocks. 12 Following Haltiwanger, Jarmin, and Miranda (2013) and Giannoulakis and Sakellaris (2020) we use a dummy variable that receives the value 1 if firms are young (less than 5 years old) and the value 0 otherwise. 13 As an alternative measure of financial leverage we use the debt-tosales ratio.…”

Section: Discussionmentioning

confidence: 99%

“…This literature has attributed these heterogeneous responses of firms to various firm‐specific factors such as: firm age and firm size (Fort, Haltiwanger, Jarmin, & Miranda, 2013; Siemer, 2019), access to capital markets (Chodorow‐Reich, 2014; Gertler & Gilchrist, 1994), intensity of research and development (Comin & Philippon, 2006) and export intensity (Blum, Claro, & Horstmann, 2013). For Greece, Giannoulakis and Sakellaris (2020) examined the heterogeneous responses of Greek firms to the 2009 financial crisis with respect to their age, size and the financing constraints they face.…”

Section: Sensitivity Analysismentioning

confidence: 99%

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Financial crises, firm‐level shocks and large downturns: Evidence from Greece

Giannoulakis

Sakellaris

2021

Int. J Fin Econ

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How do firm-specific shocks contribute to large economic downturns associated with financial crises? Using a large and representative dataset on Greek firms covering all sectors of the economy over the period 2000-2014, we find that the contribution of firm-specific shocks to the volatility of aggregate sales growth increased substantially (about 30%) during the Greek financial crisis and dominated the contribution of macro-economic and sectoral shocks. We also find that, throughout the sample period, inter-firm linkages are two and a half times as important as the direct effect of firm shocks in driving aggregate fluctuations. However, during the financial crisis, the Greek economy became more granular, and the direct effect of firm-specific shocks had increased importance in driving aggregate volatility.

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Section: Estimation Resultssupporting

confidence: 89%

Section: Discussionmentioning

confidence: 99%

Section: Sensitivity Analysismentioning

confidence: 99%

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Financial crises, firm‐level shocks and large downturns: Evidence from Greece

Giannoulakis

Sakellaris

2021

Int. J Fin Econ

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“…Second, the eruption of the financial crisis in 2009 led to a dramatic and persistent fall (14% from 2008 to 2014) in the entry rate of Greek firms. Third, the firm‐level idiosyncratic volatility increased significantly during the crisis (Giannoulakis & Sakellaris, 2021).…”

Section: Introductionmentioning

confidence: 99%

Uncertainty, firm entry, and investment dynamics

Giannoulakis

2021

Scottish J Political Eco

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Previous macro‐ and micro‐level evidence indicate that fluctuations in idiosyncratic uncertainty have an important effect on investment, both directly and indirectly through financial market frictions. The objective of this paper was to explore, beyond the two traditional and complementary channels, a new one: firm entry. By utilizing a novel and large dataset on Greek firms covering the entire economy over the period 2000–2014 and employing a panel‐VAR methodology, we examine and evaluate the impact of shocks to the number of startups, idiosyncratic uncertainty, and financial conditions on the investment growth at the industry level. Our findings can be summarized as follows. First, a shock to the number of new firms has significant effects on investment that persist for many years. Second, although all the three variables are important drivers of investment growth dynamics, uncertainty has the largest impact (explaining about the 15% of the variability of investment growth), firm creation follows (it explains about the 7%), while financial conditions have the smallest direct effect (explaining the 3.5%). Finally, we demonstrate that firm entry constitutes an important propagation mechanism for the transmission of uncertainty shocks in the investment growth trajectories.

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“…With the universe of French firms, DiGiovanni et al (2014) document that firm-level shocks contribute to aggregate volatility because of the input-output linkages. Giannoulakis et al (2020) apply idiosyncratic changes in sales growth as firm-specific shocks and find pronounced production network effects in Greece. Recently, as supplier-customer data become available after Regulation SFAS No.…”

Section: Firm Networkmentioning

confidence: 99%

Production network, aggregate idiosyncratic accounting earnings, and aggregate output

Guo¹

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This study examines whether the input-output production network affects earnings predictability for aggregate output. Decomposing aggregate idiosyncratic earnings growth according to the production network characteristics, I find that aggregate idiosyncratic earnings growth of closely connected firms and central firms predict future (one and two quarter-ahead) GDP. I also show that the predictive power is not fully anticipated by professional macro forecasters. Overall, this paper sheds light on the network-based propagation of microeconomic shocks and the origin of macroeconomic fluctuations.

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Financial Crises, Firm-Level Shocks, and Large Downturns: Evidence From Greece

Cited by 4 publications

References 0 publications

Financial crises, firm‐level shocks and large downturns: Evidence from Greece

Financial crises, firm‐level shocks and large downturns: Evidence from Greece

Uncertainty, firm entry, and investment dynamics

Production network, aggregate idiosyncratic accounting earnings, and aggregate output

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