Buera, FranciscoKarmakar, Sudipto2018-10-012018-10-012018-04Buera, Francisco e Sudipto Karmakar (2018). "Real effects of financial distress : the role of heterogeneity". Instituto Superior de Economia e Gestão – REM Working paper nº 036 - 20182184-108Xhttp://hdl.handle.net/10400.5/16017What are the heterogeneous e_ects of _nancial shocks on _rms' behavior? This paper evaluates and answers this question from both an empirical and a theoretical perspective. Using micro data from Portugal during the sovereign debt crisis, starting in 2010, we document that highly leveraged _rms and _rms that had a larger share of short-term debt on their balance sheets contracted more in the aftermath of a _nancial shock. We use a standard model to analyze the conditions under which leverage and debt maturity determine the sensitivity of _rms' investment decisions to _nancial shocks. We show that the presence of long-term investment projects and frictions to the issuance of long-term debt are needed for the model to rationalize the empirical _ndings. We conclude that the di_erential responses of _rms to a _nancial shock do not provide unambiguous information to identify these shocks. Rather, we argue that this information should be use to test for the relevance of important model assumptions.engworking paper