The resources sunk in zombie firms have risen over the last two decades, hampering productivity growth in developed economies. In this paper, we examine the recovery and exit of zombie firms among small- and medium-sized enterprises (SME), as well as the determinants of these transitions. To our knowledge, this is the first study on the determinants of the probability of a zombie recovering or exiting in a European context. The study also contributes to the discussion of the definition of zombie firms. Based on a panel of Portuguese manufacturing and services firms covering the 2004–2017 period, we do find a widespread presence of zombies. As expected, they are relatively less productive than non-zombies, while the probability of transition into recovery and exit is relatively low, which we interpret as evidence in favour of the presence of high barriers to firm mobility. In turn, the regression results show that downsizing and restructuring, as well as debt restructuring, are crucial in enhancing recovery of zombie firms. These are non-trivial results from the perspective of managers and policy makers. We performed several exercises using alternative definitions of zombie firms and estimation techniques and found that our findings are robust.

Plain English Summary A 1% decline in the share of highly indebted and unprofitable firms (i.e. zombies) is estimated to increase the average labour productivity by 3.1 percent. Recovery of zombies in particular can be enhanced by downsizing and restructuring. Based on a very large panel of Portuguese small- and medium-sized manufacturing and services firms, covering the 2004–2017 period, we do find a widespread presence of zombie firms. Moreover, the chance of these firms to recover or exit is relatively low, an evidence of the presence of high barriers to firm mobility and resource misallocation. Our results have important managerial and policy implications: (1) a coordinated and holistic restructuring strategy (technological, operational and debt-related) is crucial to increase the likelihood of recovery of weak companies; (2) governments should formulate an adequate institutional framework in order to strengthen the selection of zombie firms, namely by designing more reallocation-friendly insolvency regimes and discouraging creditors to refinance unviable firms.

在过去的二十年中，僵尸公司沉没的资源有所增加，这阻碍了发达经济体的生产率增长。在本文中，我们研究了中小型企业（SME）中僵尸企业的复苏和退出，以及这些过渡的决定因素。据我们所知，这是关于僵尸在欧洲范围内恢复或退出的可能性的决定因素的首次研究。该研究还有助于讨论僵尸公司的定义。基于涵盖2004-2017年期间的葡萄牙制造和服务公司小组，我们确实发现了僵尸的广泛存在。正如预期的那样，它们比非僵尸的生产率相对较低，而过渡到恢复和退出的可能性相对较低，我们将其解释为支持企业流动的高障碍的证据。反过来，回归结果表明，规模缩小和重组以及债务重组对于增强僵尸公司的复苏至关重要。从管理者和决策者的角度来看，这些都是不平凡的结果。我们使用僵尸公司的替代定义和估算技术进行了几次练习，发现我们的发现是可靠的。

普通英语摘要高负债和无利可图的公司（即僵尸）的份额下降1％，估计将使平均劳动生产率提高3.1％。僵尸的恢复尤其可以通过缩小规模和重组来增强。基于涵盖2004-2017年期间的葡萄牙中小型制造和服务公司的庞大团队，我们确实发现了僵尸公司的广泛存在。而且，这些公司复苏或退出的机会相对较低，这表明存在阻碍企业流动和资源配置不当的高障碍的证据。我们的结果对管理和政策产生重要影响：（1）协调一致的整体重组战略（技术，运营和债务相关）对于增加弱公司的复苏可能性至关重要；