Prediction of financial distress for multinational corporations: panel estimations across countries

Nicholas Apergis, Mita Bhattacharya, John Inekwe

Research output: Contribution to journalArticleResearchpeer-review

Abstract

This research predicts ex-ante financial distress and analyses the link between financial distress, performance, employment, `and research and development (R&D) investment in the case of multinational companies (MNCs). The conditional logit and hazard models are employed to predict financial distress, while a conditional mixed process model is employed to obtain consistent and efficient estimates. Financial distress generates contractions in performance, employment, and R&D investment. Hedging against risk mitigates the effect of financial distress on R&D. Our findings vary across countries, for example, we find MNCs in Canada, Israel and the U.S. benefit from hedging against risk. The findings also indicate that ex-ante financial distress is detrimental to employment for Canada, the U.K., the Netherlands and the U.S. The findings indicate the MNCs play different roles across countries in contributing jobs, investment in R&D during the distress period.

Original languageEnglish
Pages (from-to)4255-4269
Number of pages15
JournalApplied Economics
Volume51
Issue number39
DOIs
Publication statusPublished - 2019

Keywords

  • discrete time
  • Financial distress
  • hazard model
  • multinationals
  • performance and employment

Cite this

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Prediction of financial distress for multinational corporations : panel estimations across countries. / Apergis, Nicholas; Bhattacharya, Mita; Inekwe, John.

In: Applied Economics, Vol. 51, No. 39, 2019, p. 4255-4269.

Research output: Contribution to journalArticleResearchpeer-review

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AU - Inekwe, John

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