Bankruptcy Codes and Innovation 1 Viral

  title={Bankruptcy Codes and Innovation 1 Viral},
  author={Vijeth Acharya},
Bankruptcy Codes and Innovation We argue that when bankruptcy code is creditor-friendly, excessive liquidations cause levered firms to shun innovation, whereas by promoting continuation upon failure, a debtorfriendly code induces greater innovation. We provide empirical support for this claim by employing patents as a proxy for innovation. Using time-series changes within a country and cross-country variation in creditor rights, we confirm that a creditor-friendly code leads to lower absolute… CONTINUE READING
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