Corporations with persistently negative profitability, excessive leverage, and declining real revenue growth, are colloquially referred to as "zombie firms" due to their economically unviable nature. Such financially distressed entities operate in both developed economies and emerging markets. This paper quantifies the financial performance of zombie firms within Colombia’s petrochemical cluster using a five-component methodology. The research applies a probit regression, a comparative analysis of financial constraint indices, an investment-cash flow sensitivity model, a corporate flow of funds analysis, and a cash flow sensitivity of cash model. The probit model establishes that indebtedness, minimal asset tangibility, and inadequate operating cash flow function as the primary statistically determinant predictors of zombie status. The comparative analysis of financial constraint indic...

Corporations with persistently negative profitability, excessive leverage, and declining real revenue growth, are colloquially referred to as "zombie firms" due to their economically unviable nature.Such financially distressed entities operate in both developed economies and emerging markets. This paper quantifies the financial performance of zombie firms within Colombia’s petrochemical cluster using a five-component methodology. The research applies a probit regression, a comparative analysis of financial constraint indices, an investment-cash flow sensitivity model, a corporate flow of funds analysis, and a cash flow sensitivity of cash model. The probit model establishes that indebtedness, minimal asset tangibility, and inadequate operating cash flow function as the primary statistically determinant predictors of zombie status. The comparative analysis of financial constraint indice...