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On the identification of zombie firms

Author

Listed:
  • Luca Mingarelli
  • Jonas Wendelborn
  • Tamarah Shakir

Abstract

A survey of the most prominent definitions of zombie firms, together with their replication on a common dataset for euro area firms spanning the years 2004-2019, shows limited overlap and low comparability in the sets of firms identified by several prominent studies. Such low comparability raises the concern that these definitions are less capturing true zombie firms but rather financially vulnerable ones, and that the policy discourse may be misguided by statements on effectively distinct groups of firms. Thus, a formalization of the classifications of zombie firms is introduced which helps to make order in the growing number of variations and identification methodologies. Such formalization allows the concept of binary identification to be extended to that of fuzzy zombie identification, which allows quantification of a certain degree of "zombieness". A general procedure to turn arbitrary binary classifications into fuzzy ones is also presented and is shown to successfully increase consistency between zombie definitions.

Suggested Citation

  • Luca Mingarelli & Jonas Wendelborn & Tamarah Shakir, 2023. "On the identification of zombie firms," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 73(01), pages 57-64, December.
    • Handle: RePEc:usg:auswrt:2023:73:01:57-64
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    File URL: http://ux-tauri.unisg.ch/RePEc/usg/auswrt/AW_73-01__05_Mingarelli_etal.pdf
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    References listed on IDEAS

    as
    1. Müge Adalet McGowan & Dan Andrews & Valentine Millot & Thorsten BeckManaging Editor, 2018. "The walking dead? Zombie firms and productivity performance in OECD countries," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 33(96), pages 685-736.
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    More about this item

    Keywords

    zombie firms; vulnerable firms;

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • C55 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Large Data Sets: Modeling and Analysis
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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