Fiscal Stimulus Impact on Firms' Profitability During the Global Financial Crisis
39 Pages Posted: 14 Jan 2019
Date Written: November 2018
Using financial statement data from the Thomson Reuter's Worldscope database for 22,333 non-financial firms in 52 advanced and emerging economies, this paper examines how fiscal stimulus (i.e., changes in structural deficit) interacted with sectoral business cycle sensitivity affected corporate profitability during the recovery period of the global financial crisis (GFC). Using cross-sectional analyses, our findings indicate that corporate profitability improved significantly after the GFC fiscal stimulus, especially in manufacturing, utilities and retail sectors. Firm size and leverage are also found to be significant in explaining changes in corporate profitability.
Keywords: Fiscal stimulus, Global financial crisis, 2008-2009, Profits, Fiscal policy, Business cycles, Emerging markets, Developed countries, Global Financial Crisis, Worldscope, Firm Profitabilit, Firm Profitability, Models with Panel Data, Deficit
JEL Classification: C33, E32, E62, H62
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