Determinants of Zombie Firms: The Impact of Corporate Insolvency Efficiency and Cultural Factors

Yongcuo Zhaxi () and Yukihiro Yasuda
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Yongcuo Zhaxi: Graduate School of Business Administration, Hitotsubashi University, 2-1 Naka, Kunitachi 186-8601, Tokyo, Japan
Yukihiro Yasuda: Graduate School of Business Administration, Hitotsubashi University, 2-1 Naka, Kunitachi 186-8601, Tokyo, Japan

JRFM, 2024, vol. 17, issue 8, 1-13

Abstract: By examining a broad range of companies from both developed and developing nations from 2015 to 2021, we gather evidence on the occurrence and factors contributing to the existence of zombie firms. Approximately 10% of our observations are identified as zombie firms, and there is significant variability in the proportion of zombie firms across different countries. We find that countries with more efficient corporate insolvency rules tend to have a lower incidence of zombie firms. We also establish that a nation’s culture plays a vital role in determining the prevalence of zombie firms. More specifically, our findings indicate that countries with higher levels of individualism culture tend to have lower numbers of zombie firms.

Keywords: zombie firms; insolvency regimes; culture (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2024
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