Some insights into that future can be gleaned from the Bank’s Continuing Analysis of Zombie Companies for International Settlements.
Although the BIS research article published this week is based on somewhat dated data, it provides even better insights – including some surprising findings on the anatomy of zombie companies and their impact on the wider economy.
Zombie companies are unprofitable, unable to cover their interest costs and have low market ratings compared to the book values of their assets (which indicates poor growth prospects).
BIS data is based on listed companies, however it discusses the implications of its findings on what might happen among unlisted companies.
Data show that from the late 1980s to 2017 the proportion of zombie companies in the listed markets rose from 4 percent to 15 percent.
Perhaps surprisingly, the highest share of zombies was found in Australia, Canada and the United States, with the death toll in Australia rising to about 35 percent at the beginning of this decade, up from about 25 percent in 2017. (In Canada it was over 35 percent in 2017, and in the United States it was over 20 percent).
