Impact of Bankruptcy System on the Disposal of Zombie Enterprises: Evidence from China’s Industrial Enterprise Database

Yuqi Duan ()
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Yuqi Duan: Business School of Xiangtan University

A chapter in Proceedings of 2025 2nd International Conference on Applied Economics, Management Science and Social Development (AEMSS 2025), 2025, pp 61-72 from Springer

Abstract: Abstract In this paper, building on industrial enterprise data, a difference-in-differences approach is employed to evaluate the impact of the Enterprise Bankruptcy Law on zombie firms’ market exit behavior. The estimation results indicate that, on average, the law raises the likelihood of zombie firms exiting the market by 2.6%, with a stronger impact observed in smaller firms and those with shorter durations. Mechanism analysis reveals that the law substantially intensifies the financing constraints faced by zombie firms.

Keywords: Enterprise Bankruptcy Law; Zombie Firms; Corporate Exit (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-752-6_7

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DOI: 10.2991/978-94-6463-752-6_7

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