Teams and Bankruptcy

62 Pages Posted: 4 Sep 2019

See all articles by Ramin Baghai

Ramin Baghai

Stockholm School of Economics; Centre for Economic Policy Research (CEPR); Swedish House of Finance

Rui Silva

London Business School - Department of Finance

Luofu Ye

London Business School

Multiple version iconThere are 2 versions of this paper

Date Written: July 18, 2019

Abstract

We study how the human capital embedded in teams is reallocated in corporate bankruptcies using data on US inventors. We find that bankruptcies reduce team stability. After a bankruptcy, team-dependent inventors produce fewer and less impactful patents. This points to the loss of team-specific human capital as a cost of resource reallocation through bankruptcy. However, this cost is limited by the ability of the labor market and the market for corporate control to preserve teams. Inventors with past collaboration are likely to move jointly to a new firm after bankruptcy, and the productivity of team inventors that relocate together increases.

Keywords: Teams, Teamwork, Team-specific human capital, Bankruptcy, Labor productivity, Innovation

JEL Classification: J24, J63, G33, O31, O32

Suggested Citation

Baghai, Ramin and Silva, Rui and Ye, Luofu, Teams and Bankruptcy (July 18, 2019). Swedish House of Finance Research Paper No. 17-19; European Corporate Governance Institute - Finance Working Paper No. 626/2019. Available at SSRN: https://ssrn.com/abstract=3042304 or http://dx.doi.org/10.2139/ssrn.3042304

Ramin Baghai (Contact Author)

Stockholm School of Economics ( email )

PO Box 6501
Stockholm, 11383
Sweden

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Swedish House of Finance ( email )

Drottninggatan 98
111 60 Stockholm
Sweden

Rui Silva

London Business School - Department of Finance ( email )

Sussex Place
Regent's Park
London NW1 4SA
United Kingdom

Luofu Ye

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

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