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The Impact Of Zombie Companies On The Performance Of Healthy Companies And Economies In Selected Countries Of Central And Eastern Europe

Author

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  • Marija Logarušić

    (Faculty of Economics and Business Zagreb, University of Zagreb)

  • Irena Raguž Krištić

    (Faculty of Economics and Business Zagreb)

Abstract

The main goal of this paper is to analyze the impact of zombie companies on the performance of healthy companies, economies, and economic sentiment (ESI) in selected countries of Central and Eastern Europe between 2008 and 2016. Zombie companies are companies whose sustainability is uncertain and whose competitiveness is very limited, and such companies can potentially transfer losses to the companies they are associated with. In this paper, they are defined as companies with negative return on assets, negative net investments and interest rates coverage below 1.5. The results of the panel model with fixed effects show that the market congestion by zombie companies has a negative effect on productivity and profit per employee, a positive impact on investments and no impact on employment growth of healthy companies. Dynamic panel model results suggest that market congestion by zombie companies does not have a significant impact on the GDP of selected countries of Central and Eastern Europe while there is a positive relation with ESI. By analyzing the zombie companies issue in the Central and Eastern Europe countries, and their impact on ESI in general this paper contributes to the existing body of literature.

Suggested Citation

  • Marija Logarušić & Irena Raguž Krištić, 2022. "The Impact Of Zombie Companies On The Performance Of Healthy Companies And Economies In Selected Countries Of Central And Eastern Europe," Ekonomski pregled, Hrvatsko društvo ekonomista (Croatian Society of Economists), vol. 73(2), pages 157-185.
    • Handle: RePEc:hde:epregl:v:73:y:2022:i:2:p:157-185
    DOI: 10.32910/ep.73.2.1
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    More about this item

    Keywords

    zombie companies; panel model; productivity; profit per employee; economic sentiment indicator;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production

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