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SUMMARY:The Real Effect of Financial Innovation: Evidence from Credit Defa
 ult Swaps Trading and Corporate Innovation - Xin CHANG\, Simba (CJBS)
DTSTART:20161027T120000Z
DTEND:20161027T130000Z
UID:TALK59436@talks.cam.ac.uk
CONTACT:Cerf Admin
DESCRIPTION:We document that credit default swaps (CDS) trading on a firm
 ’s debt positively influences its technological innovation measured usin
 g patents and patent citations. The positive effect is more pronounced for
  firms relying more on debt financing\, borrowing from banks\, borrowing f
 rom fewer bank lenders\, having more restrictive debt covenants\, or using
  more short-term debt prior to CDS introduction. Further analysis shows th
 at firms’ innovation strategies become more risky and long-term oriented
  after the advent of CDS trading. These results suggest that CDS foster bo
 rrowing firms’ innovation via enhancing lenders’ risk tolerance and bo
 rrowers’ risk taking in the innovation process. Taken together\, our fin
 dings reveal the real effects of financial innovation (i.e.\, CDS) on comp
 anies’ investment and technological progress.\n
LOCATION:Room W4.03 Judge Business School
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