EURO-Online login
- New to EURO? Create an account
- I forgot my username and/or my password.
- Help with cookies
(important for IE8 users)
813. Firm Zombification & Corporate Policy: Empirical examination of Indian Firms
Contributed abstract in session MA-51: Risk management in finance, stream Risk management in finance.
Monday, 8:30-10:00Room: M5 (building: 101)
Authors (first author is the speaker)
| 1. | S YESASWI DORA
|
| VINOD GUPTA SCHOOL OF MANAGEMENT, IIT KHARAGPUR | |
| 2. | AJAY KUMAR MISHRA
|
| VINOD GUPTA SCHOOL OF MANAGEMENT, IIT KHARAGPUR |
Abstract
This study addresses the escalating concern of zombie firms in the Indian context, employing a unique methodology to identify and analyze their characteristics. Utilizing a dataset encompassing 45,867 firm-year observations from 2009-2021, our approach identifies 1,199 zombie firms, comprising 29.35% of the sample. Regression analysis reveals a positive link between high reliance on debt capital and the likelihood of zombification. These firms exhibit characteristics such as being relatively new, possessing small asset sizes, higher leverage, and poor performance. Additionally, they maintain lower cash holdings, higher leverage ratios, and lower capital intensity. Our findings indicate that zombie firms adopt a conservative cash policy and aggressive financing, coupled with a conservative investment approach. This study contributes to the existing literature, shedding light on the implications of zombification for corporate policies in the Indian business landscape. The research emphasizes the potential misallocation of funds, posing a financial burden for both companies and the economy. As the first of its kind in the Indian context, this study holds critical implications for corporates, creditors, and policymakers, providing valuable insights for enhancing economic well-being and long-term viability.
Keywords
- Finance and Banking
- Accounting
Status: accepted
Back to the list of papers