Working Paper: CEPR ID: DP8596
Authors: Olivier Godart; Holger Grg; Aoife Hanley
Abstract: Starting from the observation that all firms in Ireland (foreign and domestic in manufacturing and services industries) were hit by the crisis, the paper asks whether there is a difference in the behaviour of foreign and domestic firms. One hypothesis is that foreign multinationals are less linked into the Irish economy, so more likely to leave once the economy is hit by a negative shock. The paper discusses background hypotheses before giving empirical evidence from firstly aggregate data, and secondly firm-level observations. The analysis of the latter suggests that foreign firms are not more likely to leave during the crisis than Irish firms. Some policy conclusions are offered in the paper.
Keywords: Financial crisis; Firm survival
JEL Codes: F23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| firm size (L25) | exit probability (C62) |
| firm age (L10) | exit probability (C62) |
| crisis (H12) | exit probability (C62) |
| foreign ownership + crisis (F23) | exit probability (C62) |
| European firms (N24) | exit probability (C62) |
| foreign multinationals (F23) | exit behavior alignment with domestic firms (F23) |