This paper explores whether a firm’s intellectual capital performance reduces the probability of default and can help to predict bankruptcy. In a knowledge-based economy, intellectual capital plays a crucial role when it comes to increasing a firm’s competitiveness and performance (Lev, 2000; Seetharaman et al., 2002; Massaro et al., 2015). Several studies show that intellectual capital has a positive impact on a firm’s financial performance and market value and that they could be considered an indicator of future financial performance (e.g. Bontis, 1998; Pew Tan et al., 2007; Cabrita and Bontis, 2008; Zéghal and Maaloul, 2010; Clarke et al., 2011; Dženopoljac et al., 2016). Recent research suggests that intellectual capital can also have a relevant impact on a firm’s long-term financial health and credit rating (Guimón, 2005). In this respect, bankruptcy studies acknowledge but do not investigate the relevance of intellectual capital. Most of the accounting-based bankruptcy prediction models have not been changed since decades. Recent studies suggest that these models can be improved to properly take into account the intellectual capital, which is crucial to nowadays economy (Beaver et al., 2005; Lev and Gu, 2016). Nonetheless, to the best of the authors’ knowledge, no prior studies have investigated whether intellectual capital affects a firm’s long-term financial stability or its probability of default. This paper aims to fill this research gap. Filling this gap through this investigation is relevant in the management’s perspective. Proper management of intellectual capital could help firms to achieve a higher credit rating, lower the cost of debt, boost performance and increase market value (Dumay and Tull, 2007). ر