The Relationship between Moral Hazard and the Probability of a Company Becoming a Zombie

Moral hazard is an opportunistic behavior of manager in order to increase self- interest in an unethical way. The moral hazard of managers has adverse consequences on the financial health of companies. Therefore, the purpose of this research is to investigate the relationship between moral hazard and the possibility of companies becoming zombies.               

The research method is applied in terms of purpose and correlational in nature. The statistical population is listed firms in the stock exchange and the sampling method is systematic exclusion. The research data was collected from the website of the Stock Exchange Organization. Also, SPSS software was used for data analysis and binary logistic multivariate regression.

The results show that moral hazard has a positive and significant relationship with the possibility of companies becoming zombies. The evidence of this research shows that with the increase of financial risk, the probability of companies becoming zombies increases significantly and with the increase of profitability, the probability of companies becoming zombies decreases significantly.

moral hazard as one of managers' behavioral biases; It can increase the risk of financial health of companies and as a result the possibility of them becoming zombies. Therefore, in evaluating policies to prevent the company from becoming a zombie, this issue should be considered by financial analysts and capital market policymakers.