Innovate to Survive: The Effect of Technology Competition on Corporate Bankruptcy

This paper establishes a strong relation between technology competition and corporate bankruptcy. Using detailed firm-level patent data we show that: 1) the capability of firms to innovate predicts future bankruptcies better than the typical measures such as Z-score and credit rating, 2) technology-related bankruptcies are less sensitive to the business cycle and industry success, and 3) firms…

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