The walking dead: Are Zombie firms environmentally and socially responsible? A global perspective

• Published in: Journal of environmental management 2024-03, Vol.355, p.120499-120499, Article 120499
• Main Authors: Mashwani, Asad Iqbal, Mushtaq, Rizwan, Gull, Ammar Ali, Rind, Asad Ali
• Format: Article
• Language: English
• Subjects: China; Environment; Environmental responsibility; Heavily polluting industry; Industry; Investments; Social Behavior; Social Responsibility; Zombie firm
• ISSN: 0301-4797; 1095-8630
• DOI: 10.1016/j.jenvman.2024.120499

This study examines the association between zombie firms and their environmental and social performance. Using a global dataset of listed firms from 49 countries between 2002 and 2019, we find that zombie firms perform poorly on environmental and social responsibility fronts. This finding supports the argument that zombie firms are characterized by consistent losses and that their existence is risky without external support. Zombie firms, while struggling for survival, may not be able to undertake environmental and social activities that require huge investments, thus falling behind other firms. Further analysis highlights that eco-innovation, the presence of a sustainability committee, and industry nature (i.e., heavily polluting industries) mitigate the negative impact of firms' zombie status on their environmental and social performance. Moreover, a zombie firm's engagement in environmental and social activities improves its financial performance. Our main findings are robust to a battery of estimation techniques, alternative proxies, selection bias, and endogeneity issues. •We examine the impact of zombie firms on environmental and social performance.•Zombie firms perform poorly on environmental and social responsibility fronts.•Zombies' engagement in environmental and social activities improves their financial performance.