Bankrupt Innovative Firms

Song Ma, Joy Tianjiao Tong and Wei Wang

No 28856, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper studies how innovative firms manage their innovation portfolios after filing for Chapter 11 reorganization using three decades of data. We find that they sell off core (i.e., technologically critical and valuable), rather than peripheral, patents in bankruptcy. The selling pattern is driven almost entirely by firms with greater use of secured debt, and the mechanism is secured creditors exercising their control rights on collateralized patents. Creditor-driven patent sales in bankruptcy have implications for technology diffusion—the sold patents diffuse more slowly under new ownership and are more likely to be purchased by patent trolls.

JEL-codes: G33 O32 O34 (search for similar items in EconPapers)
Date: 2021-05
New Economics Papers: this item is included in nep-cfn, nep-fdg, nep-ino and nep-sbm
Note: CF IO LE PR
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Citations: View citations in EconPapers (9)

Published as Song Ma & Joy Tianjiao Tong & Wei Wang, 2022. "Bankrupt Innovative Firms," Management Science, vol 68(9), pages 6971-6992.

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