Why Did ‘Zombie’ Firms Recover in Japan?
The Japanese economy experienced prolonged recessions during the 1990s. Previous studies suggest that evergreen lending to troubled firms known as "zombie firms" distorted market discipline in terms of stabilizing the Japanese economy and caused significant delays in the economy's recovery. However, the eventual bankruptcy of zombies was rare. In fact, a majority of the "zombie" firms substantially recovered during the first half of the 2000s. The purpose of this paper is to investigate why zombie firms recovered in Japan. We first extend the method of Caballero, Hoshi, and Kashyap (2008) and identify zombies from among the listed firms. Subsequently, we investigate the nature of corporate restructuring that was effective in reviving zombie firms. Our multinomial logistic regressions suggest that reducing the employee strength of zombie firms and selling its fixed assets were beneficial in facilitating their recovery. However, corporate restructuring without accounting transparency or by discouraging incentives for managers was ineffective. In addition, corporate restructuring lacked effectiveness in the absence of favorable macroeconomic environment as well as substantial external financial support.
(This abstract was borrowed from another version of this item.)
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Volume (Year): 34 (2011)
Issue (Month): (07)
|Contact details of provider:|| Web page: http://www.blackwellpublishing.com/journal.asp?ref=0378-5920|
|Order Information:||Web: http://www.blackwellpublishing.com/subs.asp?ref=0378-5920|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dewatripont, M & Maskin, E, 1995.
"Credit and Efficiency in Centralized and Decentralized Economies,"
Review of Economic Studies,
Wiley Blackwell, vol. 62(4), pages 541-55, October.
- Mathias Dewatripont & Eric Maskin, 2004. "Credit and efficiency in centralized and decentralized economies," ULB Institutional Repository 2013/9605, ULB -- Universite Libre de Bruxelles.
- Mathias Dewatripont & Eric Maskin, 1995. "Credit and efficiency in centralized and decentralized economies," ULB Institutional Repository 2013/9603, ULB -- Universite Libre de Bruxelles.
- Joe Peek & Eric S. Rosengren, 2003.
"Unnatural Selection: Perverse Incentives and the Misallocation of Credit in Japan,"
NBER Working Papers
9643, National Bureau of Economic Research, Inc.
- Joe Peek & Eric S. Rosengren, 2005. "Unnatural Selection: Perverse Incentives and the Misallocation of Credit in Japan," American Economic Review, American Economic Association, vol. 95(4), pages 1144-1166, September.
- Hoshi, Takeo & Kashyap, Anil K., 1990.
"Evidence on q and investment for Japanese firms,"
Journal of the Japanese and International Economies,
Elsevier, vol. 4(4), pages 371-400, December.
- Berglöf, Erik & Roland, Gérard, 1995.
"Bank Restructuring and Soft Budget Constraints in Financial Transition,"
CEPR Discussion Papers
1250, C.E.P.R. Discussion Papers.
- Berglof Erik & Roland Gerard, 1995. "Bank Restructuring and Soft Budget Constraints in Financial Transition," Journal of the Japanese and International Economies, Elsevier, vol. 9(4), pages 354-375, December.
- Shin-ichi Fukuda & Munehisa Kasuya & Kentaro Akashi, 2008.
"Impaired Bank Health and Default Risk,"
CIRJE-F-564, CIRJE, Faculty of Economics, University of Tokyo.
- Ricardo J. Caballero & Takeo Hoshi & Anil K. Kashyap, 2008.
"Zombie Lending and Depressed Restructuring in Japan,"
American Economic Review,
American Economic Association, vol. 98(5), pages 1943-77, December.
- Ricardo J. Caballero & Takeo Hoshi & Anil K. Kashyap, 2006. "Zombie Lending and Depressed Restructuring in Japan," NBER Working Papers 12129, National Bureau of Economic Research, Inc.
- Alan Ahearne & Naoki Shinada, 2005.
"Zombie firms and economic stagnation in Japan,"
International Economics and Economic Policy,
Springer, vol. 2(4), pages 363-381, December.
- Shin-Ichi Fukuda & Satoshi Koibuchi, 2006.
"The Impacts Of "Shock Therapy" Under A Banking Crisis: Experiences From Three Large Bank Failures In Japan,"
The Japanese Economic Review,
Japanese Economic Association, vol. 57(2), pages 232-256.
- Shin-ichi Fukuda & Satoshi Koibuchi, 2005. "The Impacts of "Shock Therapy" under a Banking Crisis : Experiences from Three Large Bank Failures in Japan," CIRJE F-Series CIRJE-F-351, CIRJE, Faculty of Economics, University of Tokyo.
- Sekine, Toshitaka & Kobayashi, Keiichiro & Saita, Yumi, 2003. "Forbearance Lending: The Case of Japanese Firms," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 21(2), pages 69-92, August.
- Hanazaki, Masaharu & Horiuchi, Akiyoshi, 2003. "A review of Japan's bank crisis from the governance perspective," Pacific-Basin Finance Journal, Elsevier, vol. 11(3), pages 305-325, July.
- Boot, Arnoud W. A., 2000. "Relationship Banking: What Do We Know?," Journal of Financial Intermediation, Elsevier, vol. 9(1), pages 7-25, January.
- Shin-ichi Fukuda & Satoshi Koibuchi, 2006.
"The Impacts of "Shock Therapy" on Large and Small Clients:Experiences from Two Large Bank Failures in Japan,"
CIRJE-F-439, CIRJE, Faculty of Economics, University of Tokyo.
- Fukuda, Shin-ichi & Koibuchi, Satoshi, 2007. "The impacts of "shock therapy" on large and small clients: Experiences from two large bank failures in Japan," Pacific-Basin Finance Journal, Elsevier, vol. 15(5), pages 434-451, November.
- Fukuda, Shin-ichi & Koibuchi, Satoshi, 2006. "The Impacts of "Shock Therapy" on Large and Small Clients: Experiences from Two Large Bank Failures in Japan," CEI Working Paper Series 2006-8, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
When requesting a correction, please mention this item's handle: RePEc:bla:worlde:v:34:y:2011:i::p:1124-1137. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.