November 21, 2008
Predicting bankruptcies by examining patent portfolios
In a recent academic paper out of the University of Connecticut School of Business, professors Assaf Eisdorfer and Po-Hsuan Hsu argue that patent competition is a strong predictor of future insolvency. From the abstract:
This paper establishes a strong relationship between technology competition and corporate bankruptcy. Using a new dataset of firm-level patent applications and issues we show that (i) the competitiveness in patent-intensive industries predicts future bankruptcies better than well-used measures such as Z-score and credit rating; (ii) patent-driven bankruptcies are less related to the business cycle and industry success; and (iii) bankruptcies are significantly more costly if driven by patent competition.¶ 9:04 AM
