Innovation is a key driver of a firm’s ability to survive in the financial market. Previous studies typically consider a firm dead once its shares are delisted from the stock exchange. Despite its negative connotation, delisting may be a strategic decision and therefore be a positive outcome for the company. We study how a firm’s innovative activity, in terms of R&D investments and number of patents, shapes its survival profile, taking into account the heterogeneous nature of delistings. Using a sample of high-tech small and medium enterprises (SMEs) going public in Europe during 1998–2003, we find that more innovative firms, both in terms of patents and R&D investments, have a higher probability to be taken over. However, while firms with a rich portfolio of patents are less likely to voluntarily delist, higher R&D investments increase a firm’s likelihood of being delisted due to compliance failure.
Vismara, S. and Signori, A. (2014), "How Innovation Shapes a Firm’s Survival Profile: Takeovers, Regulatory and Voluntary Delistings", Finance and Strategy (Advances in Strategic Management, Vol. 31), Emerald Group Publishing Limited, pp. 321-340. https://doi.org/10.1108/S0742-332220140000031009Download as .RIS
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