Effects of mining collapse on firm performance: evidence from Australia

This study attempts to discover the extent to which Australian mining companies’ firm-level performance is affected by the mining collapse of 2011. To support the findings, this thesis also examines the effects on two related channels: cost of debt and investments. The difference-in-differences methodology is used on a relatively large unbalanced panel dataset comprising almost all mining and non-mining companies (except the financial sector) of the Australian Securities Exchange from 2006 to 2015. The results suggest that the mining companies have experienced a greater reduction in firm-level performance compared with the non-mining companies. The results also show that the mining companies have experienced a greater increase in the cost of debt and a greater reduction in their investments. These findings support previous literature and the expectation that the reduction in performance is associated with an increase in the cost of debt and a reduction in investments. The results are expected to contribute to our understanding of the nature of such sector-based crises on the companies within the sector compared with unaffected sectors. This thesis may have important policy implications for regulators who may bring necessary changes to their policies to assist more vulnerable companies.