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This paper reviews the literature on zombie firms to provide a holistic view by delineating their formation, impact, widespread nature, prevention and policy implications.

This paper uses a systematic literature review methodology, in which 76 papers published in journals ranked on the Australian Business Deans Council (ABDC) 2022 list were reviewed. The study period was from 2000 to 2022.

Among the main findings, the widespread problems of zombie firms were evident. The authors found that consistent support, either in the form of government grants or a weak financial framework, was responsible for their formation. The suboptimal performance of factors of production, depressed job creation, low innovation and overall negative impact on economic activity are the consequences of zombification. This can be controlled by ensuring better bankruptcy codes, focused on government assistance, technology use and better due diligence by banks.

This review serves as a reference point for future researchers as a cohesive and holistic study presenting a full picture of the problem, so that the proposed solutions are robust and tenable.

This review is among the initial attempts to comprehensively study published work on zombie firms in terms of analyzing their region-specific nature, with an emphasis on definition, causes, impact and prevention.

This paper aims to investigate the effect of bank monitoring on conditional conservative accounting of Indian listed firms. Drawing on bank monitoring and relationship lending literature, the study hypothesizes that monitoring by a single bank reduces the bank’s demand for conservatism-facilitated control transfers.

The empirical design is composed of three steps. In the first step, using data on Indian firms listed in NSE and BSE for the period 2000–2019, market-based firm-year measure and accrual cash flow-based firm-year measure of conditional conservatism is estimated. In the second step, we test the hypothesis using multivariate panel regression corrected for heteroskedasticity and incorporating firm and year-fixed effects. In the third step, we test for the robustness of the results using Heckman’s correction approach.

Results indicate that firms which are monitored by a single bank tend to be less conservative. Also, the negative association between single bank monitoring and conservatism is stronger when the firm’s debt structure is dominated by bank debt.

The study’s scope does not include analyzing the influence of characteristics of the single banker monitoring the firm. Future research could investigate attributes like ownership of the banker as a possible source of variation in the relationship documented in this study.

Accounting standard-setting boards are now discouraging implementation of conservatism to avoid bias in financial reporting. This paper finds that a strong bank–firm relationship can be a possible substitute for conservatism.

The study sheds new light on the debt structure–conservatism relationship. Bank’s availability of inside information through the transaction account and its impact on lending relationships is established in the literature. However, the literature on the determinants of conservatism has not examined how the benefit enjoyed by the firm’s single banker, possessing all the information in the transaction account can lead to bank’s reduced dependence on financial statements and subsequently reduced accounting conservatism of borrowing firms.