Natural Disaster and Natural Selection

29 Pages Posted: 6 Sep 2013

See all articles by Hirofumi Uchida

Hirofumi Uchida

Kobe University - Graduate School of Business Administration

Daisuke Miyakawa

Development Bank of Japan

Kaoru Hosono

Gakushuin University - Economics

Arito Ono

Chuo University

Taisuke Uchino

Daito Bunka University

Iichiro Uesugi

Hitotsubashi University

Date Written: March 10, 2013

Abstract

In this paper, we investigate whether a natural selection mechanism works for firm exit. By using data of firms after a devastating earthquake, the Great Tohoku Earthquake, we examine the impact of firm efficiency on firm exit both inside and outside the earthquake-affected areas. We find evidence suggesting that more efficient firms are less likely to exit both inside and outside the affected areas, which supports the natural selection mechanism. However, we also find that the mechanism is weaker for those firms whose main banks were damaged by the earthquake, which suggests that damage to banks weakens the natural selection mechanism. We also apply the same methodology to the case of the Great Hanshin-Awaji Earthquake, and again find that the natural selection mechanism works both inside and outside the affected areas. However, no significant impact of bank damage is found on the exit probability of a firm.

Keywords: firm exit, natural selection, earthquake, natural disaster, evergreening

JEL Classification: L10, G21

Suggested Citation

Uchida, Hirofumi and Miyakawa, Daisuke and Hosono, Kaoru and Ono, Arito and Uchino, Taisuke and Uesugi, Iichiro, Natural Disaster and Natural Selection (March 10, 2013). Available at SSRN: https://ssrn.com/abstract=2320878 or http://dx.doi.org/10.2139/ssrn.2320878

Hirofumi Uchida (Contact Author)

Kobe University - Graduate School of Business Administration ( email )

2-1, Rokkodai-cho, Nada-ku
Kobe, 657-8501
Japan
81-78-803-6949 (Phone)

HOME PAGE: http://www.b.kobe-u.ac.jp/~uchida

Daisuke Miyakawa

Development Bank of Japan ( email )

9-1
Otemachi 1-chome Chiyoda-ku
Toyko, 100-0004
United States
+81-3-3244-1917 (Phone)
+81-3-3270-7084 (Fax)

Kaoru Hosono

Gakushuin University - Economics ( email )

1-5-1 Mejiro, Toshima-ku
Tokyo 171-8588
Japan

Arito Ono

Chuo University ( email )

2nd floor Blg 4 Tampa Campus
742-1 Higashinakano, Hachioji
Tokyo 192-03
Japan

HOME PAGE: http://https://sites.google.com/site/aritoono/Home

Taisuke Uchino

Daito Bunka University ( email )

Iichiro Uesugi

Hitotsubashi University ( email )

2-1 Naka Kunitachi-shi
Tokyo 186-8306
Japan
+81-42-580-8348 (Phone)

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