quarta-feira, 18/11/2020
13h15 I Online
Financial Distress and the Role of Management in Micro
and Small-Sized Firms
In this paper, we focus on
managerial characteristics of micro and small-sized firms. Using linked
employer-employee data on the Portuguese economy for the 2010-2018 period, we
estimate the impact of management teams' human capital on the probability of firms
becoming financially distressed and on their subsequent recovery. Our estimates
show that the relevance of management teams' formal education on the
probability of firms becoming financially distressed depends on firms' size and
the type of education. We show that management teams' formal education and
tenure reduces the probability of micro and small-sized firms becoming
financially distressed and increases the probability of their subsequent
recovery. The estimates also suggest that those impacts are stronger for micro
and small-sized firms. Additionally, our results show that functional
experience previously acquired in other firms, namely in foreign-owned and in
exporting firms and in the area of finance, may reduce the probability of micro
firms becoming financially distressed. On the other hand, previous functional
experience in other firms seems to have a strong and highly significant impact
on increasing the odds of recovery of financially distressed firms. We conclude
that policies that induce an improvement in the managerial human capital of
micro and small-sized firms have significant scope to improve their financial
condition, enhancing the resilience of the economy against shocks.
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Núcleo de Investigação em Políticas Económicas e Empresariais (NIPE)
Escola de Economia e Gestão (EEG)
Universidade do Minho
Campus de Gualtar, 4710-057 Braga
Tel.: +351 253604518
Email: nipe@eeg.uminho.pt
Site: http://www.nipe.eeg.uminho.pt