The Impact of State Aid on the Survival and Financial Viability of Aided Firms

55 Pages Posted: 28 Apr 2016

See all articles by Sven Heim

Sven Heim

ZEW – Leibniz Centre for European Economic Research

Kai Hüschelrath

ZEW – Leibniz Centre for European Economic Research

Philipp Schmidt-Dengler

University of Mannheim

Maurizio Strazzeri

University of Konstanz

Date Written: April 2016

Abstract

We estimate the causal impact of restructuring aid granted by the European Commission between 2003 and 2012 on the survival and financial viability of aided firms. Using a comprehensive dataset we find that restructuring aid increases a firm’s average survival time by 8 to 15 years and decreases the hazard rate by 58 to 68 percent, depending on the definition of firm survival. Further analysis finds strong support that, in the longer run, aid receiving firms have a significantly higher probability to improve their financial viability than the counterfactual group.

Keywords: Government policy, state aid, ex-post evaluation, survival, European Union

JEL Classification: C41, D62, D73, G33, G38, H23 , L52 , L98 , O52

Suggested Citation

Heim, Sven and Hüschelrath, Kai and Schmidt-Dengler, Philipp and Strazzeri, Maurizio, The Impact of State Aid on the Survival and Financial Viability of Aided Firms (April 2016). ZEW - Centre for European Economic Research Discussion Paper No. 16-035. Available at SSRN: https://ssrn.com/abstract=2771111 or http://dx.doi.org/10.2139/ssrn.2771111

Sven Heim (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Kai Hüschelrath

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Philipp Schmidt-Dengler

University of Mannheim ( email )

Universitaet Mannheim
Department of Economics
Mannheim, 68131
Germany

Maurizio Strazzeri

University of Konstanz ( email )

Fach D-144
Universitätsstraße 10
Konstanz, D-78457
Germany

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