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Article: Corporate Innovation, Default Risk, and Bond Pricing

TitleCorporate Innovation, Default Risk, and Bond Pricing
Authors
Issue Date2015
Citation
Journal of Corporate Finance, 2015, v. 35, p. 329-344 How to Cite?
AbstractWe propose firm-level innovation performance to be an important determinant of corporate creditworthiness and examine such a relation from the perspective of bond investors. We find that firms’ default probabilities are negatively related to the quantity, impact, originality, and generality of their patent portfolios. Moreover, bonds issued by more innovative firms have lower issuance premiums and lower realized excess returns. Our findings are further supported by instrumental regressions that use monetary and time costs of innovation, and by difference-in-differences tests based on exogenous shocks from state-level R&D tax credits.
Persistent Identifierhttp://hdl.handle.net/10722/220227
SSRN

 

DC FieldValueLanguage
dc.contributor.authorHsu, P-
dc.contributor.authorLee, H-
dc.contributor.authorLiu, Z-
dc.contributor.authorZhang, Z-
dc.date.accessioned2015-10-16T06:33:07Z-
dc.date.available2015-10-16T06:33:07Z-
dc.date.issued2015-
dc.identifier.citationJournal of Corporate Finance, 2015, v. 35, p. 329-344-
dc.identifier.urihttp://hdl.handle.net/10722/220227-
dc.description.abstractWe propose firm-level innovation performance to be an important determinant of corporate creditworthiness and examine such a relation from the perspective of bond investors. We find that firms’ default probabilities are negatively related to the quantity, impact, originality, and generality of their patent portfolios. Moreover, bonds issued by more innovative firms have lower issuance premiums and lower realized excess returns. Our findings are further supported by instrumental regressions that use monetary and time costs of innovation, and by difference-in-differences tests based on exogenous shocks from state-level R&D tax credits.-
dc.languageeng-
dc.relation.ispartofJournal of Corporate Finance-
dc.titleCorporate Innovation, Default Risk, and Bond Pricing-
dc.typeArticle-
dc.identifier.emailHsu, P: paulhsu@hku.hk-
dc.identifier.emailLee, H: hhlee@hku.hk-
dc.identifier.authorityHsu, P=rp01553-
dc.identifier.authorityLee, H=rp01556-
dc.identifier.doi10.1016/j.jcorpfin.2015.09.005-
dc.identifier.hkuros255612-
dc.identifier.ssrn2024776-

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