Angela’s Research
The research behind the ideas — peer-reviewed publications, working papers, and ongoing projects that sit at the intersection of corporate finance, monetary policy, and macroeconomics.
PAPER ONE
Are you a Zombie Firm? An Early Warning System Based on Machine Learning Methods
With Thomas Heil & Franziska Peter · Revise & Resubmit
This paper develops an early warning system to predict zombie firms based on a logit model with features selected by machine learning methods. We apply LASSO and random forests to large data sets of listed firms from Europe and the U.S. to find the most important variables that distinguish a zombie firm from a recovered zombie.
We find that beyond debt and income, taxes, equity and working capital are recurring features. Altogether, we document that differently to standard pre-selected variables, an ensemble of features related to the firm capital, financial, and industry structure are needed to predict zombie firms and recovered zombies.
Angela’s presentation starts at 41m46s
PAPER TWO
How Does Competition Affect Zombie Firms?
with Marc Brunner and Philip Valta · Revise & Resubmit
This paper analyzes the effects of product market competition on zombie firms in the US. We show that the asset-weighted share of zombie firms at the industry level decreases significantly with more competition. This decrease is mostly pronounced in industries characterized by low concentration and low margins. Moreover, neither the exit or default probability, nor the recovery likelihood are significantly affected by changes in competition. Finally, at the firm level, zombie firms grow more slowly, reduce their total assets and cash holdings, issue less equity, and obtain smaller loans with more competition. These findings suggest that zombie firms adapt to higher competition by reducing the size of their business.
PAPER THREE
When Companies Don’t Die: Analyzing Zombie Firms in a Low Interest Rate Environment
Swiss Review of International Economic Relations,
Volume 73, Issue 1, pp. 67-85, 2023
We examine whether low interest rates foster non-viable firms in Europe by analyzing two classes of firms: zombies and distressed. Controlling for the business cycle and recession periods, we find a significantly negative effect of short-term rates on the likelihood of being a zombie, while no effect for distressed firms is detected. A decrease in inflation and a lower state of the business cycle is associated with a rise in both zombies and distressed firms.
Examining a non-conventional monetary policy program, we find no evidence of credit misallocation. Therefore, concurring monetary and macroeconomic phenomena likely explain the presence of non-viable firms, although with dissimilarities between zombies and distressed firms.
PAPER FOUR
The Effects of Organized Crime on Distressed Firms
March 2020
This study captures the presence of organized crime groups in the Italian territories and examines their relationship to firms that are in a condition of financial distress. At the end of the nineteenth century the first criminal groups emerged in the South of Italy as a response to the demand for private protection by local landlords. Using firm-level data and detailed information on organized crime activities, this paper tests the hypothesis that organized crime groups support financially distressed companies by supplying them with private protection in the form of access to credit. The results show a higher concentration of distressed firms in regions with a high presence of organized crime groups.