The Effects of Zombie Firms on the Financial Information Transparency of Other Firms

Abstract

Zombie firms have strong negative effects on society. This paper empirically investigates the effects of zombie firms on the financial information transparency of normal firms and finds that zombie firms significantly reduce the financial information transparency of these normal firms, thus also reducing their performance. Further analysis reveals that zombie firms have more obvious negative effects on the financial information transparency of firms without political connections, firms in poor legal environments, and firms in highly competitive industries.