The Life-cycle Dynamics of Zombie Companies amongst Listed Firms in China

Joel Bowman*

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    4 Citations (Scopus)


    This paper analyses the life-cycle dynamics of zombie companies – broadly defined as businesses that are consistently unable to meet their interest expenses from current profits – amongst listed firms in China over the period 2008–2019. A large share of zombie companies subsequently return to nonzombie status. This proportion is higher for firms undergoing a major restructuring event, low leverage levels, and with smaller operating expense ratios. However, zombie firms that return to nonzombie status continue to have lower levels of profitability compared with their industry peers and have a higher probability of relapsing into zombie status compared with firms that have never been classified as zombie. Concerted efforts to revive zombie companies using major restructuring events appear insufficient in overcoming the longer term scarring effects of zombification on firms' profitability. The results highlight the potential benefits of the ongoing efforts by Chinese regulators to improve the delisting process.

    Original languageEnglish
    Pages (from-to)185-205
    Number of pages21
    JournalChina and World Economy
    Issue number5
    Publication statusPublished - 1 Sept 2022


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