Modelling Greek Firms’ Survival Rates and Identifying “Zombies”

This paper examines the prevalence, dynamics, and failure risk of zombie firms in Greece during the post-crisis and post-Covid period, using firm-level Orbis data over the period 2015–2023. Building on the composite zombie classifica?on introduced in PwC (2015), which does not rely mechanically on interest coverage ra?os and is well suited to the Greek corporate environment, we document four main findings. First, the share of zombie firms declined substan?ally over the recovery period, despite a temporary increase during the Covid-19 episode. Second, zombifica?on is predominantly transitory: most zombie firms recover, while a non-negligible frac?on remains persistently weak or exits the market. Third, using a Cox propor?onal hazards model, we show that zombie status is associated with a hazard of firm failure approximately 2.7 ?mes higher, even a?er controlling for standard firm-level characteris?cs. Fourth, we document pronounced heterogeneity across firm size, with zombie incidence and failure risk par?cularly elevated among micro firms. The results highlight zombifica?on as a dis?nct firm state associated with materially higher failure risk.