Innovate or die: Corporate innovation and bankruptcy forecasts
Publication Date
12-1-2020
Document Type
Article
Publication Title
Journal of Empirical Finance
Volume
59
DOI
10.1016/j.jempfin.2020.09.002
First Page
88
Last Page
108
Abstract
We investigate the relationship between a firm's innovation performance and its probability of bankruptcy. Estimating the discrete hazard model with a comprehensive set of bankruptcies spanning the period of 1980–2009, we find several previously neglected innovation-based variables are important determinants of bankruptcy probability, especially for firms belonging to technology-intensive industries. R&D productivity demonstrates persistent significance across different prediction horizons while the predictive power of patent count becomes larger and more significant at longer prediction horizons. We also find that a firm's organization capital intensity correlates positively with future bankruptcy.
Keywords
Corporate bankruptcy, Discrete hazard model, Innovation, Patent
Department
Marketing and Business Analytics
Recommended Citation
Qing Bai and Shaonan Tian. "Innovate or die: Corporate innovation and bankruptcy forecasts" Journal of Empirical Finance (2020): 88-108. https://doi.org/10.1016/j.jempfin.2020.09.002
