Teams and Bankruptcy

59 Pages Posted: 24 Sep 2018 Last revised: 19 Aug 2019

See all articles by Ramin Baghai

Ramin Baghai

Stockholm School of Economics; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); 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: September 2018

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: bankruptcy, creative destruction, Innovation, labor productivity, Team-specific human capital, Teams, Teamwork

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

Suggested Citation

Baghai, Ramin and Silva, Rui and Ye, Luofu, Teams and Bankruptcy (September 2018). CEPR Discussion Paper No. DP13198, Available at SSRN: https://ssrn.com/abstract=3254233

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

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

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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