Credit default swaps and corporate innovation

• 成果类型: Article
• 署名作者: Chang, Xin; Chen, Yangyang; Wang, Sarah Qian; Zhang, Kuo; Zhang, Wenrui
• 署名单位: Nanyang Technological University; Hong Kong Polytechnic University; University of Warwick; Shanghai Jiao Tong University; Chinese University of Hong Kong
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2017.12.012
• 发表日期: 2019
• 页码: 474-500
• 关键词: Credit default swaps; Corporate innovation; risk-taking; financial innovation

摘要

We show that credit default swap (CDS) trading on a firm's debt positively influences its technological innovation output measured by patents and patent citations. This positive effect is more pronounced in firms relying more on debt financing or being more subject to continuous monitoring by lenders prior to CDS trade initiation. Moreover, after CDS trade initiation, firms pursue more risky and original innovations and generate patents with higher economic value. Further analysis suggests that CDSs improve borrowing firms' innovation output by enhancing lenders' risk tolerance and borrowers' risk-taking in the innovation process, rather than by increasing Research and Development (R&D) investment. Taken together, our findings reveal the real effects of CDSs on companies' investments and technological progress. (C) 2019 Elsevier B.V. All rights reserved.