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The fate of zombie firms: prediction, determinants and exit paths

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  • David Veganzones
  • Eric Séverin

Abstract

In recent decades, the previously unknown problem of zombie firms has become a prominent research topic, reflecting growing recognition that the presence of zombie firms in a market can compromise the sustainable development of incumbent firms. Therefore, it is relevant to examine both the fate of zombie firms and the determinants of zombification processes. Using a sample of 6762 zombie firms in France, this study investigates the capacity of machine learning and statistical methods to predict a variety of fate states (remain zombie, recovered, bankrupt), explains the main firm-level determinants of the fate of zombie firms and reveals why zombie firms continue to operate when they should have exited the market. The findings fill a marked gap in the literature by clarifying this critical corporate issue from a new perspective and have implications for both policy makers and managers.

Suggested Citation

  • David Veganzones & Eric Séverin, . "The fate of zombie firms: prediction, determinants and exit paths," Journal of Risk Model Validation, Journal of Risk Model Validation.
    • Handle: RePEc:rsk:journ5:7961671
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