Are zombie firms more incentivized to financialize?

This paper investigates whether zombie firms demonstrate a tendency to invest in the financial sector, a practice we term financialization strategy. Unlike those in the United States, Japan, and Europe, we find that zombie firms in China are not necessarily small and that they rely heavily on govern...

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Autores principales:	Haomin Wu, Meng Yang, Jun Gu
Formato:	article
Lenguaje:	EN
Publicado:	Elsevier 2021
Materias:	Zombie firms Financialization Spillover effect Government subsidies Accounting. Bookkeeping HF5601-5689
Acceso en línea:	https://doaj.org/article/ea0743924e2a45678ce949d49664cff4
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id	oai:doaj.org-article:ea0743924e2a45678ce949d49664cff4
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spelling	oai:doaj.org-article:ea0743924e2a45678ce949d49664cff42021-11-26T04:25:49ZAre zombie firms more incentivized to financialize?1755-309110.1016/j.cjar.2021.05.003https://doaj.org/article/ea0743924e2a45678ce949d49664cff42021-12-01T00:00:00Zhttp://www.sciencedirect.com/science/article/pii/S1755309121000332https://doaj.org/toc/1755-3091This paper investigates whether zombie firms demonstrate a tendency to invest in the financial sector, a practice we term financialization strategy. Unlike those in the United States, Japan, and Europe, we find that zombie firms in China are not necessarily small and that they rely heavily on government subsidies in addition to bank loans for survival. In addition, we document that zombie firms in China experience limited investment opportunities in their core businesses. This combination of readily available funding and limited investment opportunities jointly motivate the financialization of firms with zombie status. We further find that financialization is preferred by non-state-owned firms and by those located in regions with less developed markets. Finally, we suggest that a contagion effect can occur in terms of financialization in provinces that have a high percentage of zombie firms. This research sheds light on the effects of a triangular relationship among firms, government agencies, and financial institutions on both the operations of individual firms and overall market efficiency.Haomin WuMeng YangJun GuElsevierarticleZombie firmsFinancializationSpillover effectGovernment subsidiesAccounting. BookkeepingHF5601-5689ENChina Journal of Accounting Research, Vol 14, Iss 4, Pp 100199- (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	Zombie firms Financialization Spillover effect Government subsidies Accounting. Bookkeeping HF5601-5689
spellingShingle	Zombie firms Financialization Spillover effect Government subsidies Accounting. Bookkeeping HF5601-5689 Haomin Wu Meng Yang Jun Gu Are zombie firms more incentivized to financialize?
description	This paper investigates whether zombie firms demonstrate a tendency to invest in the financial sector, a practice we term financialization strategy. Unlike those in the United States, Japan, and Europe, we find that zombie firms in China are not necessarily small and that they rely heavily on government subsidies in addition to bank loans for survival. In addition, we document that zombie firms in China experience limited investment opportunities in their core businesses. This combination of readily available funding and limited investment opportunities jointly motivate the financialization of firms with zombie status. We further find that financialization is preferred by non-state-owned firms and by those located in regions with less developed markets. Finally, we suggest that a contagion effect can occur in terms of financialization in provinces that have a high percentage of zombie firms. This research sheds light on the effects of a triangular relationship among firms, government agencies, and financial institutions on both the operations of individual firms and overall market efficiency.
format	article
author	Haomin Wu Meng Yang Jun Gu
author_facet	Haomin Wu Meng Yang Jun Gu
author_sort	Haomin Wu
title	Are zombie firms more incentivized to financialize?
title_short	Are zombie firms more incentivized to financialize?
title_full	Are zombie firms more incentivized to financialize?
title_fullStr	Are zombie firms more incentivized to financialize?
title_full_unstemmed	Are zombie firms more incentivized to financialize?
title_sort	are zombie firms more incentivized to financialize?
publisher	Elsevier
publishDate	2021
url	https://doaj.org/article/ea0743924e2a45678ce949d49664cff4
work_keys_str_mv	AT haominwu arezombiefirmsmoreincentivizedtofinancialize AT mengyang arezombiefirmsmoreincentivizedtofinancialize AT jungu arezombiefirmsmoreincentivizedtofinancialize
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Are zombie firms more incentivized to financialize?

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