Do zombie firms affect healthy firms' exporting? Evidence from China

This paper empirically investigates whether zombie firms affect healthy firms' exporting. Using the 1998–2007 Chinese firm-level dataset, we provide strong evidence that zombie firms significantly decrease exports of healthy firms in each city-industry cluster, that is, both whether to export and export values are affected by zombie firms. Specifically, non-stated-owned enterprises (non-SOEs) are more vulnerable to the effect than their SOE counterparts. In addition, we also identify government subsidies, financial resources and total factor productivity as the sources of the effect, and the heterogeneous export performances of different types of firms are due to the variation in these sources.