CAN THE DIGITAL ECONOMY REVITALIZE ZOMBIE ENTERPRISES?

The impact and operational mechanisms of the digital economy on China's zombie firms cannot be ignored. From the theoretical perspectives of advanced industrial structure and rational industrial organization, this paper empirically tests the effects of the digital economy on zombie firms using data from China's A-share listed companies from 2013 to 2020. The baseline regression results indicate that the digital economy significantly revitalizes zombie firms. Heterogeneity studies show that the revitalizing effect is more pronounced for zombie firms in the western region, larger zombie firms, and state-owned zombie enterprises. Mechanism tests reveal that the digital economy revitalizes zombie firms by promoting rational industrial organization, advancing industrial structure, and alleviating financing constraints. The conclusions of this paper not only offer new ideas for the transformation of China's zombie firms but also provide insights for other developing countries undergoing digital transformation.