We investigate whether strategically small firms that avoid surpassing size-dependent regulations in non-crisis periods may have benefited more from public resources during the COVID-19 crisis.
We define as strategically small the firms positioning themselves below two thresholds: (i) €6 million revenues, implying less stringent tax and its oversight, or (ii) 50 employees, benefiting from looser labor laws and lower disclosure requirements.
We first document systematic firms' bunching below the revenues and employees thresholds, suggesting that these regulations may discourage firm growth. We do not observe similar behaviors at other disclosure and auditing thresholds. We then show that these firms were more likely to obtain public funding during the crisis, relative to firms just above the thresholds. Despite accessing more public resources, strategically small firms exhibit similar or lower growth and performance than their counterparts during and after the crisis. Overall, we document that size-dependent regulations affect firms' behavior in good times and have unintended effects on public resource allocation in crisis times.
Mircea Epure is Associate Professor at the Department of Economics and Business at Universitat Pompeu Fabra (UPF). He is also Affiliated Professor at the Barcelona School of Economics and the UPF-Barcelona School of Management, where he directs the Business Analytics MSc track.
He has a PhD in Business Economics and Administration from Universitat Autònoma de Barcelona (a European Doctoral Program jointly organized with Växjö [now Linnaeus] University, Sweden). He has visited Växjö University in Sweden and IESEG School of Management in France, and has taught at the Toulouse Business School.
Epure is interested in governance, corporate performance, entrepreneurship and accounting. His research was published in leading management and business economics journals. Epure’s work attracted funding from national institutions, La Caixa Foundation, and the CEIBS Cathay Cross-border Private Equity Research Fund.
It was cited in The Oxford Handbook of Corporate Law and Governance and World Bank studies, spotlighted among top cited articles, and nominated for an award by the International Corporate Governance Society. His articles have been featured on the Columbia Law School Blue Sky Blog, Atlanta Fed Policy Hub, and in the press releases of the Strategic Management Society, among other policy and media outlets.
He teaches graduate and undergraduate courses on Organizations and Markets, and Management Accounting and Control in Barcelona, and invited graduate lectures such as at U. of Padua and the Institutional & Organizational Economics Academy.
The seminar will be held in English, during which will be presented the paper entitled: “Strategically Small Firms and the Real Effects of Public Grants in a Crisis”. Co-authors: Mircea Epure, Ozan Güler, Amedeo Pugliese.
Major Information: Antonio De Vito (a.devito@unibo.it).