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The Problem with Zombie Companies

By Kelvin Tai - Economics and Management Student @ Harris Manchester College, Oxford

 

With a slew of zombie-related film entertainment released in 2021 such as Army of the Dead and Kingdom’s Ashin of the North, it might be time to examine the non-fictional, corporate version. A zombie company is one that lumbers along while saddled with high levels of debt. Such companies may still earn an operating income, but it is only sufficient to pay for the interest on debt and not the principal. The term originated from a paper examining Japan during the “Lost Decade” but is also applicable to European and American firms today.