To Invest or Not to Invest, That Is the Question: Analysis of Firm Behavior under Anticipated Shocks

Kovac, Dejan; Vuković, Vuk; Kleut, Nikola; Podobnik, Boris

doi:10.1371/journal.pone.0158782

Cited by 10 publications

(14 citation statements)

References 33 publications

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“…They found that it was mainly the older companies and those with a higher risk rating that demanded external finance more often, while the opposite was true for women-led businesses and businesses with positive profits. Kovac et al (2016) found higher survival rate for SMEs that invested prior to anticipated shock in comparison to similar SMEs that did not invest. They concluded that proper investment strategy might help the SMEs to adapt and survive external shocks such as the GFC.…”

Section: Introductionmentioning

confidence: 82%

Likely winners and losers in upcoming COVID-19 economic crisis – lessons learned from the GFC

Čadil

Beránek

Kovář

2021

JEEE

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Purpose The COVID-19 pandemic and subsequent efforts to contain it have started economic downturn that may even surpass the global financial crisis (GFC). The purpose of this study is to uncover the features of enterprises’ resilience during and after an external shock such as the GFC might be helpful in predicting the shock impact on enterprises and setting proper policy measures for the upcoming COVID-19 crisis. Design/methodology/approach The authors analysed the impact of the GFC on the entrepreneurial population in/of the Czech Republic using marginal effects method on a large random sample of 4,478 enterprises. In this analysis, the authors defined two groups of enterprises – “winners” and “losers” – based on the company’s dissolution and performance indicators. Findings The GFC struck the enterprise population asymmetrically in terms of the enterprises’ characteristics but also in terms of time. Micro and small size companies are the most vulnerable to external shocks such as the GFC. Technological level plays an important role in the recovery phase, especially in the case of manufacturing micro enterprises. Research limitations/implications Although there are differences between the GFC and the COVID-19 crisis, the GFC was the only comparable shock in modern history in its global nature, depth and unpredicted occurrence. It can be expected that the impact on enterprises can be partly similar. Practical implications Government support of micro size companies should be the priority in the upcoming COVID-19 crisis. Supporting the innovation and technology progress might accelerate the recovery phase after the crisis especially in micro companies as well. Originality/value This paper presents interesting insights into the impact of external shocks such as the GFC or COVID-19 on enterprises. It uncovers typical features of “winners” or “losers” of such shocks.

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Section: Introductionmentioning

confidence: 82%

Likely winners and losers in upcoming COVID-19 economic crisis – lessons learned from the GFC

Čadil

Beránek

Kovář

2021

JEEE

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“…Given that prior studies find that micro firms tend to be particularly vulnerable to liquidity issues (i.e. Kovač et al, 2016;Perić and Vitezić, 2016) we investigate whether small creditors were particularly hard hit by these spillover effects.…”

Section: Research Strategymentioning

confidence: 99%

The Impact of Delay: Evidence from Formal Out-of-Court Restructuring

et al. 2021

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Bankruptcy restructuring procedures are used in most legal systems to decide the fate of businesses facing financial hardship. We study how bargaining failures in such procedures impact the economic performance of participating firms in the context of Croatia, which introduced a "pre-bankruptcy settlement" (PBS) process in the wake of the Great Recession of 2007 -2009. Local institutions left over from the communist era provide annual financial statements for both sides of more than 180,000 debtor-creditor pairs, enabling us to address selection into failed negotiations by matching a rich set of creditor and debtor characteristics. Failures to settle at the PBS stage due to idiosyncratic bargaining problems, which effectively delays entry into the standard bankruptcy procedure, leads to a lower rate of survival among debtors as well as reduced employment, revenue, and profits. We also track how bargaining failures diffuse through the network of creditors, finding a significant negative effect on small creditors, but not others. Our results highlight the impact of delay and the importance of structuring bankruptcy procedures to rapidly resolve uncertainty about firms' future prospects.

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“…A parametric test was conducted to check if investors who made a prior investment before the recession were able to survive during this period. It turned out that there was around a 60-70% success rate for those who made investments (Kovac, Vukovic, Kleut, & Podobnik, 2016). This information is helpful to investors when they analyze if investing is wise when a recession is approaching.…”

Section: Probabilitymentioning

confidence: 99%

Untitled

2018

WIJAR

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Entrepreneurship, traditionally seen as a male preserve, has witnessed increasing participation from females in recent years. Across the world, the number of enterprises being run by women is growing exponentially. Nepal is not an exception to this emerging trend. However, there are embedded structural and socio-cultural constraints which pose a challenge to the growth of women entrepreneurs and the stability of the entrepreneurial ecosystem in Nepal. Through qualitative research, this article attempts to study the phenomenon of the entrepreneurship of women and explore the status-quo and the policy framework for female entrepreneurs in Nepal. This article explores the current entrepreneurial environment for Nepalese women, as well as the issues and challenges associated with it. This study was conducted within the Kathmandu valley and samples of the study were drawn from various stakeholders comprising of financial institutions, government agencies, I/NGOs, venture capitalists and women entrepreneurs. The data required for the study was obtained via in-depth personal interviews, key informants' interviews and literature reviews from a variety of well-researched journals and articles. The sixfactor model, inclusive of social, economic, competitive, facilitating, locational and political aspects identified by Bulsara, Chandwani and Gandhi (2014), has been assessed to understand the inherent challenges. Additionally, a political, economic, social, technological, environmental and legal (PESTEL) framework has been used to analyse insights from current women in the Nepalese entrepreneurial ecosystem. This study revealed that the process of lengthy documentation, bureaucratic hassles, political uncertainty, unconducive business environments, corruption, strikes, and unionization are the concurrent factors affecting the entrepreneurial environment in Nepal. On the policy side, though an amendment has been made in the Nepal Enterprise Act to support the entrepreneurship of women, the effectiveness of the policy support is still questioned. Acharya, M.

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To Invest or Not to Invest, That Is the Question: Analysis of Firm Behavior under Anticipated Shocks

Cited by 10 publications

References 33 publications

Likely winners and losers in upcoming COVID-19 economic crisis – lessons learned from the GFC

Likely winners and losers in upcoming COVID-19 economic crisis – lessons learned from the GFC

The Impact of Delay: Evidence from Formal Out-of-Court Restructuring

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