Debtor Rights, Credit Supply, and Innovation

• 成果类型: Article
• 署名作者: Cerqueiro, Geraldo; Hegde, Deepak; Penas, Maria Fabiana; Seamans, Robert C.
• 署名单位: Universidade Catolica Portuguesa; New York University; Tilburg University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2016.2509
• 发表日期: 2017
• 页码: 3311-3327
• 关键词: debtor protection; credit markets; INNOVATION; patents; personal bankruptcy law; Small businesses

摘要

Firms' innovative activities can be sensitive to public policies that affect the availability of capital. In this paper, we investigate the effects of regional and temporal variation in U.S. personal bankruptcy laws on firms' innovative activities. We find that bankruptcy laws that provide stronger debtor protection decrease the number of patents produced by small firms. Stronger debtor protection also decreases the average quality, and variance in quality, of firms' patents. We find evidence that the negative effect of stronger debtor protection on experimentation and innovation may be due to the decreased availability of external financing in response to stronger debtor rights, an effect amplified in industries with a high dependence on external financing. Hence, while it is typically assumed that stronger debtor protection encourages innovation by reducing the cost of failure for innovators, we show that it can instead dampen innovative activities by tightening the availability of external financing to innovative firms.