Citigroup Awards

A USD 5,000 award was generously funded by Citigroup for the best paper presented at the conference. The award went to Viral V Acharya (London Business School and CEPR) and Krishnamurthy Subramanian (Emory University) for their paper entitled Bankruptcy Codes and Innovation. The paper posed the question-‘Do legal institutions governing financial contracts affect the nature of real investments in the economy?’

The authors presented a simple model and provided evidence that the answer to this question is ‘yes’. Bankruptcy codes in different countries play a central role in determining whether the firm is continued or liquidated in case of financial distress. When the code is creditor-friendly, excessive liquidations cause the firms to shy away from innovations. In contrast, by promoting continuation upon failure, a debtor-friendly code induces greater innovation.



For complete paper http://isb.edu/summerresearchconference/BankruptcyCodesandInnovation_new.pdf