Abstract
We explore what firm and macroeconomic factors assisted Chinese firms to resist the global financial crisis. We find that firms with higher top ten shareholder ratios or firms that are older exhibited saliently higher performance during the crisis, but performed poorly during the non-crisis period. Firm size has a notably negative impact on firm performance. Firms audited by the Big Four accounting firms have a significantly negative correlation with performance. During the crisis, stock markets became less efficient in incorporating firm-specific information into stock prices, signifying that the determinants of firm performance vary across non-crisis and crisis periods.
Highlights
Global equity markets dropped more than 56% and there was a reduction in equity value of more than $29 trillion in the recent global crisis (Bartram & Bodnar, 2009; Chen, Chen, & Lee, 2014a; Lee, Lin, & Zeng, 2016)
In order to explore the determinants of firm performance during the crisis and non-crisis periods, we further split up two subsample periods from total sample period: the results of columns three and four refer to the non-crisis period (1999–2006) and columns five and six report the estimates for the years of the main financial crisis, namely 2007–2010
We report the estimates of the full model with the firm and macroeconomic factors
Summary
Global equity markets dropped more than 56% and there was a reduction in equity value of more than $29 trillion in the recent global crisis (Bartram & Bodnar, 2009; Chen, Chen, & Lee, 2014a; Lee, Lin, & Zeng, 2016). Despite the overall negative impact of the global financial crisis, some companies profited during the market turbulence (Shakina & Barajas, 2014). This raises a fundamental question: what are the firm and macroeconomic determinants of firms’ performance during crisis periods? In responding to the economic situation, governments and firm management adopted various policies or strategies to minimise the severity of the situation and to better cope with the challenges of the severe economic environment. Performance of the firm depends on its ownership structure, financial features, and disclosure quality, and external environments (period and macroeconomic elements). Some researchers argue that firm performance is
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