Technology Innovation Activity and Default Risk of Firms : Focusing on a Mediation Effect of Profitability

기술혁신활동이 부도위험에 미치는 영향 : 수익성 매개효과를 중심으로

  • Received : 2009.06.21
  • Accepted : 2010.01.29
  • Published : 2010.03.01


This study explores the effects of technology innovation activity on a profitability and the default risk of firms. Sample for this study consists of manufacturing firms listed on the Korea Stock Exchange from 1st January 2000 to 31st December 2007. We use of R&D ratio as a proxy of technology innovation activity. The default probability proxied for the default risk of firms is measured by the Merton's (1974) model where accounts for a market value of firms and a volatility of it. This study provides evidence that technology innovation activity has a positive effect on a profitability, but a negative effect on the default risk of firms. Our study also finds the significant mediation effect of profitability that the enhancement in profitability resulting from technology innovation activity lowers the default risk of firms.