Valuation Effects along the Technology Channel: Evidence from Corporate Bankruptcies

45 Pages Posted: 4 Sep 2015 Last revised: 20 Aug 2017

See all articles by Jiaping Qiu

Jiaping Qiu

McMaster University - Michael G. DeGroote School of Business

Jin Wang

Wilfrid Laurier University - Lazaridis School of Business & Economics

Wei Wang

Queen's University - Smith School of Business

Date Written: July 8, 2017

Abstract

We document the valuation effects of bankruptcy announcements through technological relatedness. The average value of firms that intensively cite the technologies of a bankrupt firm decreases by 1% around the time of the bankruptcy announcement. The effects are not attributable to other economic linkages such as industry, customer-supplier relationships, and strategic alliances. The effects are more pronounced if the bankruptcy filing is likely a result of aging technologies possessed by the filer and among related firms that have non-diversified technologies. Our results reveal technological relatedness as an important economic linkage and suggest that the valuation effects of bankruptcy extend beyond product markets.

Keywords: bankruptcy, distress, technology, innovation, economic linkage, spillover

JEL Classification: G33, G14, O33

Suggested Citation

Qiu, Jiaping and Wang, Jin and Wang, Wei, Valuation Effects along the Technology Channel: Evidence from Corporate Bankruptcies (July 8, 2017). Available at SSRN: https://ssrn.com/abstract=2654853 or http://dx.doi.org/10.2139/ssrn.2654853

Jiaping Qiu (Contact Author)

McMaster University - Michael G. DeGroote School of Business ( email )

1280 Main Street West
Hamilton, Ontario L8S 4M4
Canada

Jin Wang

Wilfrid Laurier University - Lazaridis School of Business & Economics ( email )

Waterloo, Ontario N2L 3C5
Canada

Wei Wang

Queen's University - Smith School of Business ( email )

Queen's University-Smith School of Business
143 Union Street
Kingston, Ontario K7L 3N6
Canada

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