Influence of corporate governance on exit time: evidence from French zombie firms

Abstract

Purpose This study investigates the connection between corporate governance and zombie firm’s exit time. Design/methodology/approach With a sample of 2,794 French zombie firms, the analysis focuses on four aspects of corporate governance: board size (BS), managerial ownership (MO), director turnover (DT) and ownership concentration, using tobit regression. Findings Dimensions of corporate governance have an important role in determining zombie firms’ exit time. MO and ownership concentration increase zombie firm exit time, whereas larger BSs and DT reduce it. Originality/value To the best of the authors’ knowledge, this study is the first to include corporate governance as a characteristic relevant to zombie firms’ exit time. It provides new insights on why some zombie firms remain in the market longer than expected.