CeBER working paper highlighted in the Portuguese Economy Research Report
The paper Giving Zombie Firms a Second Change: An assessment of the reform of the Portuguese Insolvency Framework, CeBER Working-Paper, by Ernesto Nieto-Carrillo, Carlos Carreira and Paulino Teixeira has recently been highlighted in the Portuguese Economy Research Report, which aim is to cover the most important research done about the Portuguese Economy. The blog is curated by Rui Albuquerque, Professor at the Boston College and CEPR and by Domingos Seward from Banco de Portugal.
The results of this research show that the probability of remaining as a zombie firm declined after the introduction of the 2012 reforms (see figure), an indication of the success of the reforms. The new institutional framework seems in particular to have a larger effect on recovery than on the exit transition. The probability of a zombie company remaining in this condition the following year decreased by 8 percentage points after the 2012 insolvency regime reform.