The Effect of Creditor Interventions on Firm Innovation

Wednesday, November 13
Noon to 1 p.m., Room 230 Main

Presenter: Yuqi (George) Yu, Ph.D., assistant professor, finance

Dr. Yu will examine the effect of creditor interventions on firm innovation via the lens of debt covenant violations, where control rights are shifted from equity holders to creditors. The baseline results show that creditor interventions triggered by covenant violations are negatively related to both innovation quantity and quality. Additionally, the results have found that the negative effect of creditor interventions on innovation is exacerbated by strong creditor controls and mitigated by creditors' expertise in the innovative firms' industries. Finally, the turnover of innovative inventors appears a possible underlying mechanism through which creditors adversely affect firm innovation. Dr. Yu's research offers novel evidence on an unidentified real effect of creditor interventions — their hindrance to firm innovation.

Yuqi Gu (George), Ph.D., assistant professor, finance, received his doctorate from Temple University Fox School of Business and Management, and his bachelorette from the University of Hong Kong. His research interests include empirical corporate finance, corporate governance and risk management. His recent research has been presented at the Eastern Finance Association meeting and at the Financial Management Association meeting. He teaches financial management, financial decision processes, and research in security valuation at graduate level. He is a member of the Eastern Finance Association and Financial Management Association.

Free and open to faculty, staff, students, and the community. Seating is limited; Contact Lori Hoyle at ljh29@psu.edu or call 610-648-3229. to register.