Original scientific paper
https://doi.org/10.18045/zbefri.2020.1.101
Reexamination of the determinants of firms’ growth in periods of crisis
Dejan Malinić
orcid.org/0000-0001-5525-1278
; University of Belgrade, Faculty of Economics, Kamenička 6, 11000 Belgrade, Serbia
Ksenija Denčić-Mihajlov
orcid.org/0000-0002-2419-0676
; University of Niš, Faculty of Economics, Trg kralja Aleksandra 11, 18000 Niš, Serbia
Konrad Grabiński
orcid.org/0000-0002-1071-3317
; Cracow University of Economics, Faculty of Finance, Kraków, Poland
Abstract
The recent financial crisis has underlined the necessity to recognize why some firms and economies are more severely affected while others are more resilient to crisis and how different financial characteristics affect firms’ growth path. In order to explore these issues empirically, we reexamine the determinants of corporate growth during the crisis and post-crisis period (2008-2013) on the sample of 10 Central and East European countries belonging to two different regional groups – “Visegrad four” and the group of former Yugoslavian countries. Our analysis covers the sample of 3,660 firm-year observations. We model firm growth as a function of two country-specific variables (inflation and capital market liquidity) and four company-specific variables (financial leverage, asset turnover, profit margin and ratio between cash flow and assets). Our study indicates the importance of infrastructure prerequisites and macroeconomic policies for the companies’ growth in the conditions of crisis. Our results reveal a specific relation between leverage and firm growth during the crisis period, whereby the impact of leverage is perceived by a comprehensive result of the degree of firm indebtedness, the level of capital market development, the position of banking sector and the cost of debt. Finally, our results show some intriguing patterns in firm profitability – growth as well as asset efficiency – growth relation.
Keywords
firm growth; crisis; capital market; country-specific variable; company-specific variable
Hrčak ID:
240197
URI
Publication date:
30.6.2020.
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