A Zombie Outbreak - A Study of Unhealthy Firms' Influence on Healthy Firms' Growth Progression In Sweden.
(2023) NEKP01 20231Department of Economics
- Abstract
- This paper examines the impact of zombie firms on healthy companies’ growth indicators in the Swedish market. By utilising fixed-effects regression analysis and analysing a comprehensive data set, the paper aims to shed light on the dynamics between zombies’ effects on nonzombies’ development. The findings indicate that zombies have limited effects on healthy companies in Sweden. Contrary to previous literature suggesting that zombies hinder the growth of nonzombies, the regression analysis does not consistently support this notion. The competitive nature of the Swedish market is identified as a probable factor that mitigates any negative impact of zombies on nonzombies’ relative growth in total assets. The paper suggests that different... (More)
- This paper examines the impact of zombie firms on healthy companies’ growth indicators in the Swedish market. By utilising fixed-effects regression analysis and analysing a comprehensive data set, the paper aims to shed light on the dynamics between zombies’ effects on nonzombies’ development. The findings indicate that zombies have limited effects on healthy companies in Sweden. Contrary to previous literature suggesting that zombies hinder the growth of nonzombies, the regression analysis does not consistently support this notion. The competitive nature of the Swedish market is identified as a probable factor that mitigates any negative impact of zombies on nonzombies’ relative growth in total assets. The paper suggests that different sectors may be influenced differently by the presence of zombies. Capital-intensive industries, which heavily rely on capital inputs, appear to be more susceptible to the effects of zombies. Misallocations of capital in these industries can have significant repercussions on the growth of healthy firms. However, caution is advised as certain branch sectors may not be ideal for studying zombie impacts due to specific industry circumstances that could lead to misclassification. To enhance the precision of the results, the paper proposes incorporating additional control variables, particularly time-varying sector-specific ones. These variables can capture shocks that vary over time and differ across sectors, providing a better understanding of the effects of zombie presence on nonzombie growth measures. The paper also suggests refining the criteria for labelling zombies based on branch sectors and exploring sector-specific effects in future research. The paper concludes that the long-term effects of zombies on the growth of healthy firms in Sweden remain inconclusive. The resilience of Sweden’s growth rate suggests the need for further investigation and analysis. Policymakers can benefit from understanding the implications of zombie survival and the trade-offs between the benefits derived from lowinterest rates and the negative externalities that may arise. Continued research in this area can provide valuable insights for informed decision-making. Overall, this study contributes to the existing body of knowledge by providing insights into the dynamics between zombies and nonzombies in the Swedish market by considering sector-specific effects. Future research can deepen the understanding of the long-term implications of zombies and guide policymakers in addressing potential challenges and opportunities. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9120459
- author
- Tjerneld, Jacob LU and Wennberg, Jacob LU
- supervisor
- organization
- course
- NEKP01 20231
- year
- 2023
- type
- H2 - Master's Degree (Two Years)
- subject
- keywords
- Zombie firms, spillover effects, capital misallocation
- language
- English
- id
- 9120459
- date added to LUP
- 2023-06-19 10:09:13
- date last changed
- 2023-06-19 10:09:13
@misc{9120459,
abstract = {{This paper examines the impact of zombie firms on healthy companies’ growth indicators in the Swedish market. By utilising fixed-effects regression analysis and analysing a comprehensive data set, the paper aims to shed light on the dynamics between zombies’ effects on nonzombies’ development. The findings indicate that zombies have limited effects on healthy companies in Sweden. Contrary to previous literature suggesting that zombies hinder the growth of nonzombies, the regression analysis does not consistently support this notion. The competitive nature of the Swedish market is identified as a probable factor that mitigates any negative impact of zombies on nonzombies’ relative growth in total assets. The paper suggests that different sectors may be influenced differently by the presence of zombies. Capital-intensive industries, which heavily rely on capital inputs, appear to be more susceptible to the effects of zombies. Misallocations of capital in these industries can have significant repercussions on the growth of healthy firms. However, caution is advised as certain branch sectors may not be ideal for studying zombie impacts due to specific industry circumstances that could lead to misclassification. To enhance the precision of the results, the paper proposes incorporating additional control variables, particularly time-varying sector-specific ones. These variables can capture shocks that vary over time and differ across sectors, providing a better understanding of the effects of zombie presence on nonzombie growth measures. The paper also suggests refining the criteria for labelling zombies based on branch sectors and exploring sector-specific effects in future research. The paper concludes that the long-term effects of zombies on the growth of healthy firms in Sweden remain inconclusive. The resilience of Sweden’s growth rate suggests the need for further investigation and analysis. Policymakers can benefit from understanding the implications of zombie survival and the trade-offs between the benefits derived from lowinterest rates and the negative externalities that may arise. Continued research in this area can provide valuable insights for informed decision-making. Overall, this study contributes to the existing body of knowledge by providing insights into the dynamics between zombies and nonzombies in the Swedish market by considering sector-specific effects. Future research can deepen the understanding of the long-term implications of zombies and guide policymakers in addressing potential challenges and opportunities.}},
author = {{Tjerneld, Jacob and Wennberg, Jacob}},
language = {{eng}},
note = {{Student Paper}},
title = {{A Zombie Outbreak - A Study of Unhealthy Firms' Influence on Healthy Firms' Growth Progression In Sweden.}},
year = {{2023}},
}