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Zombie firms in China's coal mining sector: Identification, transition determinants and policy implications

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  • Dai, Xiaoyong
  • Qiao, Xiaole
  • Song, Lin

Abstract

This paper uses a modified identification method to identify zombie firms from a large sample of coal mining companies in China. It analyzes the prevalence of zombie firms over time and their distribution across different regions and ownership types. It also investigates the causes of the emergence of zombies and evaluates the effectiveness of various restructuring measures for resolving zombie firms. The results indicate that government interventions and subsidized bank credit are important causes of zombie firms, and continuous financial support from the government or banks does not contribute to the recovery of zombie firms. While reductions in labor costs, ownership reforms, and deleveraging can effectively resolve zombie firms, the injection or sale of assets has an ambiguous impact on the recovery of zombie firms. This study contributes to an understanding of the causes of the emergence of zombie firms and provides some policy implications for tackling zombie firms in China's coal sector.

Suggested Citation

  • Dai, Xiaoyong & Qiao, Xiaole & Song, Lin, 2019. "Zombie firms in China's coal mining sector: Identification, transition determinants and policy implications," Resources Policy, Elsevier, vol. 62(C), pages 664-673.
    • Handle: RePEc:eee:jrpoli:v:62:y:2019:i:c:p:664-673
    DOI: 10.1016/j.resourpol.2018.11.016
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    Cited by:

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    2. Wan, Junmin & Qiu, Qiqi, 2023. "Industrial investments and housing prices in China," International Review of Economics & Finance, Elsevier, vol. 84(C), pages 832-852.
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    4. Joel Bowman, 2022. "The Life‐cycle Dynamics of Zombie Companies amongst Listed Firms in China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 30(5), pages 185-205, September.
    5. Tan, Yizhi & Yang, Chengjie & Qian, Kaihao & Jiang, Chengxin, 2024. "Asset injection and enterprise earnings management," Finance Research Letters, Elsevier, vol. 62(PB).
    6. Leire San-Jose & Sara Urionabarrenetxea & Jose-Domingo García-Merino, 2022. "Zombie firms and corporate governance: What room for maneuver do companies have to avoid becoming zombies?," Review of Managerial Science, Springer, vol. 16(3), pages 835-862, April.
    7. Ren, Meixu & Zhao, Jinxuan & Zhao, Jingmei, 2023. "The crowding-out effect of zombie companies on fixed asset investment: Evidence from China," Research in International Business and Finance, Elsevier, vol. 65(C).
    8. Wang, Changrong & Richardson, Grant & Cao, Yanming, 2024. "Long live the walking dead? Corporate tax avoidance and zombie firms in China," The British Accounting Review, Elsevier, vol. 56(3).
    9. Ren, Meixu & Zhao, Jinxuan & Zhao, Jingmei, 2023. "Why is it difficult for Chinese companies to operate across regions in China?—Evidence from zombie companies," International Review of Financial Analysis, Elsevier, vol. 87(C).
    10. Feng, Ling & Lang, Henan & Pei, Tingting, 2022. "Zombie firms and corporate savings: Evidence from Chinese manufacturing firms," International Review of Economics & Finance, Elsevier, vol. 79(C), pages 551-564.

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    More about this item

    Keywords

    Zombie firms; China's coal mining sector; Government interventions; Subsidized bank credit; Restructuring measures;
    All these keywords.

    JEL classification:

    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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