What matters for corporate failures in Asia? Exploring the role of firm-specific characteristics during the Asian crisis

Empirical investigation of business failures has considered the effects of macroeconomic conditions and financial healthiness in isolation. Using a panel of five Asian economies - Indonesia, Korea, Malaysia, Singapore and Thailand - over the period 1995--2007 we analyse the link between firm survival and financial healthiness during the 1997-98 Asian crisis. We show that the sensitivity of survival to financial indicators is significantly higher during the crisis compared to tranquil periods. In addition, we find that the effect of financial indicators is quantitatively and qualitatively more important in economies with less developed stock exchanges