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ARTICLE · 10 OCTOBER 2018

Beware The Zombie Invasion (Stock Exchange Edition)

On September 18, Deloitte released a new report which outlines a roadmap for the competitive business climate in Canada. Included in the report is a warning that "Canada may have a zombie problem."

CanadaCorporate/Commercial Law

On September 18, Deloitte released a new report which outlines a roadmap for the competitive business climate in Canada. Included in the report is a warning that "Canada may have a zombie problem." Luckily, Deloitte isn't raising concern about hordes of flesh-eating undead, but rather the relatively large number of "zombie companies" that exist on Canadian stock exchanges. The report identifies "zombie companies" as those who do not have enough earnings to cover their interest payments and found that out of the 2,274 companies listed on the Toronto Stock Exchange and the TSX Venture Exchange, 16% could be considered "zombies" compared to the OECD average of 10%. According to Deloitte, the reason to be concerned about these "zombie companies" is that they are locking up significant amounts of capital and talent to the detriment of more productive firms.

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