Empirical Analysis of Factors of Corporate Bankruptcies During the COVID-19 Pandemic

The COVID-19 pandemic has precipitated an unprecedented wave of corporate bankruptcies, amplifying the urgency to comprehend the underlying determinants driving such insolvencies. This research undertakes a meticulous examination of the multifaceted factors shaping the probability of firm bankruptcy during the pandemic based on a unique self-created dataset consisting of data on 472 companies worldwide. The study finds that corporate liquidity indicators and credit ratings are significantly negatively correlated with the odds of corporate failure during 2020, while shedding the light on the positive impact of being registered in countries belonging to the European Union on the survivorship during crisis events with the opposite being true for BRICS participants. The country level analysis revealed that the impact of credit ratings on default probabilities is less strong for Russia and Brazil. These findings contribute not only to academic discourse but also to informing policy decisions and strategic responses to mitigate the adverse economic effects of the pandemic on corporations worldwide. Furthermore, the methodological approach and analytical framework developed in this study can serve as a blueprint for future research on crises and their effects on corporate behavior.