Strategic Behavior of Zombie Companies: Differences Between Family and Non-Family Companies Listed in Mexico

Abstract

Zombie companies are organizations that receive preferential treatment and benefits from various institutions. In addition, they have a negative connotation since they affect the markets where they operate. To understand this type of company in Mexico, the influence of the type of business strategy on the probability of being a zombie company is analyzed. For this, a logit analysis was used to evaluate the probability of incurring in the zombie attribute, and a panel of 99 companies that were listed on the Mexican Stock Exchange during the period from 2013 to 2017 was adopted. The empirical result shows that the type of defensive strategy reduces the probability of incurring in the zombie situation. On the other hand, the type of analytical and proactive strategy shows a greater probability of being classified as zombie companies, which, a priori could surprise, however, the Latin American institutional environment favors that such behavior is prone to lead to the zombie situation. Regarding the family element, no significant differences are found between family and non-family businesses.