IDEAS home Printed from https://ideas.repec.org/h/spr/prbchp/978-981-97-6242-2_13.html
   My bibliography  Save this book chapter

Identification of Zombie Firm and Understanding Its Capital Structure Mix

In: Financial Markets and Corporate Finance

Author

Listed:
  • Asha K. Rai

    (Indian Institute of Technology Indore)

  • Ruchi Sharma

    (Indian Institute of Technology Indore)

Abstract

Zombie firms cause enormous harm to the economy; therefore, it is crucial to understand the phenomenon. The present study identifies zombie firms from a large sample of all non-financial firms in India. It analyses the prevalence of zombie firms over time and their distribution across various industries using a three-digit National Industrial Classification (NIC) classification. Furthermore, this study investigates the causes of the emergence of zombies and evaluates the effectiveness of various re-structuring measures for resolving zombie firms. The study empirically analyses the capital structure composition of zombie firms to understand the mere reason for their formation. Using data for 2000–20, our analysis reveals that around nineteen per cent of Indian firms show the characteristic of zombie firms, and their capital structure is highly skewed toward debt capital-which makes the already loss-making firm more vulnerable as they struggle to service their debt out of the revenue they earn. To a certain extent, the conclusion of the formation of zombie firms would be conducive to adjusting the direction and intensity of further research.

Suggested Citation

  • Asha K. Rai & Ruchi Sharma, 2024. "Identification of Zombie Firm and Understanding Its Capital Structure Mix," Springer Proceedings in Business and Economics, in: Shveta Singh & Sonali Jain (ed.), Financial Markets and Corporate Finance, chapter 0, pages 241-263, Springer.
    • Handle: RePEc:spr:prbchp:978-981-97-6242-2_13
    DOI: 10.1007/978-981-97-6242-2_13
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:prbchp:978-981-97-6242-2_13. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.