2013 Fiscal Year Final Research Report
Recovery of "zombie" firms, fixed investment and corporate governance in Japan
| Project/Area Number |
24830033
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| Research Category |
Grant-in-Aid for Research Activity Start-up
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| Allocation Type | Single-year Grants |
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| Research Field |
Economic policy
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| Research Institution | Hitotsubashi University |
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Principal Investigator |
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| Project Period (FY) |
2012-08-31 – 2014-03-31
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| Keywords | 問題企業の復活 / 失われた20年 / リストラクチャリング / 設備投資行動 / 企業統治 |
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| Research Abstract |
It is widely documented that around the end of the 1990s, there existed a large number of troubled firms that survived under evergreen lending by Japanese banks. Previous studies called these troubled borrowers as "zombie" firms and pointed out that zombie firms had distorted market discipline in terms of stabilizing the Japanese economy and had caused significant delays in the macroeconomic recovery.
We empirically explored how zombie firms emerged and recovered in Japan while the deflation persisted. We found; (1) a majority of zombie firms eventually recovered during the first half of the 2000s but depended heavily on cost cutting efforts, (2) healthy firms tend to under- or over invest due to their own distorted incentives brought by corporate governance problems even after the recovery of zombie firms. Each of these facts could hinder the full-fledged recovery of macro economy.
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Research Products
(6 results)
