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Perhaps weak firms are kept alive and strong firms starved of capital by fragile banks.
Downsizing and corporate restructuring hit hard at the enlightened benevolence of weak firms.
Weak firms go bust and turn many workers loose, irrespective of quality.
If demand remains weak, firms will stop adding to this stock of capital and may scrap some of it.
Under ministry guidance, banks kept weak firms in business, they say, in the end undermining the entire economy.
They are all for capitalism, but like the idea of keeping weak firms in business with subsidies.
Similar(29)
Even a small and seemingly weak firm may engage in FDI as long as it can successfully leverage external resources.
A German stock market investor is seemingly better of if she invests into firms with "weak" firm characteristics and ignores exposures to the commonly used risk factors.
The persistent performance advantage of some "weak" firm characteristic stocks compared to some "strong" firm characteristic stocks can either arise because they are riskier or because the differences in performance are due to mispricing (Daniel and Titman 1998: 24, 25).
A FB portfolio goes long in a portfolio of stocks with "weak" firm characteristics and short in a portfolio of stocks with "strong" firm characteristics while both portfolios exhibit similar factor loadings.
Our results also suggest, in line with Daniel and Titman (1998), that investors should form portfolios that are long in stocks with "weak" firm characteristics and short in stocks with "strong" firm characteristics.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com