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Impact of Bankruptcy System on the Disposal of Zombie Enterprises: Evidence from China’s Industrial Enterprise Database

In: Proceedings of 2025 2nd International Conference on Applied Economics, Management Science and Social Development (AEMSS 2025)

Author

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  • Yuqi Duan

    (Business School of Xiangtan University)

Abstract

In this paper, building on industrial enterprise data, a difference-in-differences approach is employed to evaluate the impact of the Enterprise Bankruptcy Law on zombie firms’ market exit behavior. The estimation results indicate that, on average, the law raises the likelihood of zombie firms exiting the market by 2.6%, with a stronger impact observed in smaller firms and those with shorter durations. Mechanism analysis reveals that the law substantially intensifies the financing constraints faced by zombie firms.

Suggested Citation

  • Yuqi Duan, 2025. "Impact of Bankruptcy System on the Disposal of Zombie Enterprises: Evidence from China’s Industrial Enterprise Database," Advances in Economics, Business and Management Research, in: Jiye Hu & Huaping Sun & Au Yong Hui Nee & Paulo Batista (ed.), Proceedings of 2025 2nd International Conference on Applied Economics, Management Science and Social Development (AEMSS 2025), pages 61-72, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-752-6_7
    DOI: 10.2991/978-94-6463-752-6_7
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