CEO Age, Firm Exit and Zombification amidst the COVID-19 Pandemic

This study investigates the impact of the COVID-19 pandemic on zombification, firm exit, and chief executive officer (CEO) succession, and examines how CEO age moderates these effects. Using Japanese firm-level data from 2013 to 2021, we discover that the prevalence of zombification increased during the COVID-19 pandemic, as firm performance deteriorated and financial leverage increased. However, the pandemic had a limited impact on firm exit. We also find that the impact of the pandemic on firms varied depending on the age of their CEOs. Firms led by younger CEOs were more likely to increase their long-term borrowing and less likely to exit the market. Conversely, firms led by older CEOs were more likely to exit voluntarily or experience CEO turnover, and this was true especially for family-owned firms and those in peripheral prefectures.