| dc.description.abstract | This thesis investigates whether government support to companies during COVID-19 has
reached the “right” companies. We analyse how well-targeted the compensation scheme for
companies in Norway has been, in that it reached companies that were both viable and hardhit
by the pandemic. By using publicly available data on compensation payments to
Norwegian companies in 2020 matched with the companies’ respective company information
and accounting data, we conduct a twofold empirical analysis. First, we estimate the effect of
companies’ bankruptcy probability, measured by Altman’s Z-Scores in 2019, on received
compensation by employing an OLS regression model. Second, we apply a logit regression
model and a two-way fixed effects model to analyse the effect of received compensation on
companies’ dividend payments. Our results suggest that companies that had a moderate and
high probability of going bankrupt received 18.9% and 7.1% more compensation than those
that had a low bankruptcy probability, respectively. Further, our findings indicate that
companies that received more compensation had a lower probability of paying out dividends
in 2020 and also paid out less dividends that year. The obtained results imply that the scheme
has not fully lived up to its purpose in terms of targeting otherwise viable companies, yet we
find no evidence that it reached companies that were not in great need of support. These
insights can be valuable when having to construct well-targeted and efficient policy responses
to support companies in future crises. | en_US |
