Acharya, Viral V; Subramanian, Krishnamurthy - C.E.P.R. Discussion Papers - 2007
financial distress. When the code is creditor-friendly, excessive liquidations cause the firm to shy away from innovation. In … contrast, by promoting continuation upon failure, a debtor-friendly code induces greater innovation. This effect remains robust … when the firm attempts to sustain innovation by reducing its debt under creditor-friendly codes. Employing patents as a …