Innovate or die: Corporate innovation and bankruptcy forecasts

Qing Bai and Shaonan Tian

Journal of Empirical Finance, 2020, vol. 59, issue C, 88-108

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 (search for similar items in EconPapers)
JEL-codes: G33 O32 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:empfin:v:59:y:2020:i:c:p:88-108

DOI: 10.1016/j.jempfin.2020.09.002

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