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

ABSTRACT: 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 bet

SUBMITTER: Kovac D 

PROVIDER: S-EPMC4979903 | biostudies-literature | 2016

REPOSITORIES: biostudies-literature