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- Title
Bankrupt Innovative Firms.
- Authors
Ma, Song; Tong, Joy Tianjiao; Wang, Wei
- Abstract
We study how innovative firms manage their innovation portfolios after filing for Chapter 11 reorganization using three decades of data. We find that they sell off core (i.e., technologically critical and valuable), rather than peripheral, patents in bankruptcy. The selling pattern is driven almost entirely by firms with greater use of secured debt, and the mechanism is secured creditors exercising their control rights on collateralized patents. Creditor-driven patent sales in bankruptcy have implications for technology diffusion—the sold patents diffuse more slowly under new ownership and are more likely to be purchased by patent trolls. This paper was accepted by Gustavo Manso, finance.
- Subjects
NONPRACTICING entities (Patent law); BANKRUPTCY; TECHNOLOGY transfer; BANKRUPTCY reorganization; BUSINESS enterprises; INNOVATIONS in business; DEBTOR &; creditor
- Publication
Management Science, 2022, Vol 68, Issue 9, p6971
- ISSN
0025-1909
- Publication type
Article
- DOI
10.1287/mnsc.2021.4141