Teams and Bankruptcy

Abstract We study how the human capital embedded in teams is affected by, and reallocated through, corporate bankruptcies. After a bankruptcy, U.S. inventors produce fewer and less impactful patents. Moreover, teams become less stable. Consequently, compared to inventors that rely less on teamwork,...

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Bibliographic Details
Published in:The Review of financial studies 2024, Vol.37 (9), p.2855-2902
Main Authors: Baghai, Ramin P, Silva, Rui C, Ye, Luofu
Format: Article
Language:English
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Summary:Abstract We study how the human capital embedded in teams is affected by, and reallocated through, corporate bankruptcies. After a bankruptcy, U.S. inventors produce fewer and less impactful patents. Moreover, teams become less stable. Consequently, compared to inventors that rely less on teamwork, the performance of team inventors deteriorates more. These findings point to the loss of team-specific human capital as a cost of resource reallocation through bankruptcy. Acquisitions by industrial firms and joint mobility of inventors with past collaborations limit these losses, suggesting that the labor market and the market for corporate control help preserve team-specific human capital in bankruptcies.
ISSN:0893-9454
1465-7368
1465-7368
DOI:10.1093/rfs/hhae017