Innovate or die: Corporate innovation and bankruptcy forecasts
Marketing and Business Analytics
Journal of Empirical Finance
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.
Corporate bankruptcy, Discrete hazard model, Innovation, Patent
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